Maybe Life Insurers Are Too Focused on Core Operations

The consultants make the points that the life business looks better in emerging markets than in the United States and Europe, and that life insurers need to do a lot more to cut costs.

The consultants also talk about several ideas for increasing growth. One is forming alliances with, or acquiring, companies in adjacent industries.

Companies known primarily as asset managers, health insurers or property-casualty insurers account for about 16% of the world's life insurance profits, the consultants write.

Life insurers, meanwhile, account for only 4% of the profits in the health insurance, P&C and asset-management markets.

Life insurers have to work especially hard for their profits, because the amount of capital needed to generate a certain amount of revenue is about 35% higher in the life market than in the asset-management market, and about 10 times higher than in the health insurance market, the consultants write.

— Read Insurance M&A Deals: Rocketing to New Heights, on ThinkAdvisor.

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