Countries where the state plays a prominent role in the healthcare system will be prime targets for life insurers over the next 5 to 10 years.
So concludes the report Life Insurance and Annuities State of the Industry 2018: The growth imperative by think tank McKinsey & Company. Revenues for the private health care insurance market should double by 2025, McKinsey predicts. They total $1.5 trillion today.
Demand is being stoked by the aging population, coupled with the growing prevalence of chronic diseases, McKinsey explains. “At the same time, pressure on public finances is prompting many governments to impose healthcare-spending cuts or seek out private payers as intermediaries to better manage spending and outcomes,” the report adds.
Limited opportunities in Canada
The McKinsey analysts also outline opportunities for life insurers in Canada, which they define as a commodity market. They stressed that the Canada Pension Plan provides limited benefits. Yet a high percentage of the Canadian population has a pension account to which a business makes a direct contribution.
The snag is that investment companies are already well-established in this market. This is particularly true for pension funds. To summarize, the life insurance industry has a lower penetration as a percentage of GDP, which makes the growth outlook more challenging, the consulting firm concludes.