3 Key Challenges to Organic Growth and Where Life Insurers Are Focusing

The U.S. life insurance industry continues to face rising operating costs, declining customer counts, and modest premium growth. As a result, organic growth increasingly depends on reducing the cost to serve, limiting policy cancellations, and improving existing customer relationships. According to the J.D. Power 2024 U.S. Individual Life Insurance Study, several structural challenges continue to affect these efforts.

Challenge 1: Managing the Cost to Serve

Controlling service-related expenses remains a priority for life insurers. Routine customer requests, such as payments or account updates, often move through high-cost service channels.

To address this, insurers are expanding self-service options that allow customers to complete low-complexity tasks digitally. When used effectively, these tools reduce operational strain and enable employees to focus on higher-value interactions.

Challenge 2: Reducing Cancellations and Surrenders

Policy cancellations and surrenders continue to affect profitability. Consistent engagement plays a central role in reducing attrition by helping insurers understand changes in customers’ personal and financial situations.

The J.D. Power 2024 study shows:

• 20% of customers say their policy does not fully meet current needs.
• 24% say it does not meet future needs.
• 55% report their advisor has not asked about beneficiary needs.

These gaps highlight the importance of regular communication and policy reviews.

Challenge 3: Strengthening Relationships and Cross-Selling

Transactional, product-focused interactions limit engagement and trust. More advisory-oriented relationships create opportunities to identify life changes and offer complementary products.

J.D. Power data shows:

• 35% of customers who worked with an agent have not interacted with them in more than 3 years.
• Only 31% of agent-supported customers had contact in the past 12 months.

Where Insurers Are Focusing

Transparency and Clarity

Clear communication supports trust and understanding. According to J.D. Power:

• 36% of customers do not fully understand their policy terms.
• 40% do not fully understand costs and fees.
• 25% received no communication in the past 12 months.

Simplifying language and focusing discussions on life goals rather than product features helps address these issues.

Digital Enablement

Customers expect efficient and convenient digital experiences, but gaps remain:

• Online applicants rate ease and speed lower than most other application methods.
• 55% of customers review statements using paper, with an NPS 16 points lower than digital users.
• 57% expect to manage their policy as they see fit, but only 43% say their insurer allows this.

These findings underscore the need for practical digital tools and support for their adoption.

Customer Engagement

Customers compare insurers to leading brands in other industries, which raises expectations for technology and service.

J.D. Power reports:

• 51% of customers give top trust ratings overall, but this drops to 33% for some carriers.
• 28% of customers have never logged into their insurer’s website, and their NPS is less than half that of active users.

Engagement quality also matters:

• 26% describe their advisor relationship as transactional, with an average satisfaction score of 553.
• 32% classify their advisor as trusted, with an average satisfaction score of 799.