The development of simple products has been identified as a way for insurers to meet customer expectations amid a changing world.
A report from the Association of British Insurers (ABI), Identifying the challenges of a changing world: The trend facing insurers towards the 2020s highlighted trends such as global ageing, regulation, political challenges and the development of Western economies after the financial crisis.
To meet such challenges, a focus on 'customer-centricity' and tackling the reputation of the insurance industry, will be shaped by a combination of product needs, distribution regimes and the impact of technology on the insurer-customer proposition.
One area where insurers can change customer attitudes is the growing appetite for simple products, in the long-term savings, life and protection markets, the report said.
The growth of such products will be a reflection of the changing regulatory focus and lobby pressure that products should "do what they say on the tin."
However, potential challenges will include: "The complexity of the design and operation of products sold under the ‘vanilla' wrapper and regulatory reluctance to endorse such products in a way that will help build consumer confidence.
"Mirroring this is also increasing simplicity in service and processes as the industry focuses on stripping out unnecessary complexity to ensure better front-end service to the customer."
The report added it will be in the interests of policymakers to encourage such innovation as they search out insurance-based solutions for some of the "more intractable problems they face", such as demographic change and welfare reform.
"Policymaker interest will not, in itself, generate product development but it can be an important ingredient in the mix, especially if combined with regulatory engagement.
"This is apparent at the moment in ministerial approval of the Simple Products initiative and it will be a vital component of any development of a market for a range of Long Term Care products" it concluded.
