Thinking About Cost Reduction

Our thinking about the near-future of the Life, Pensions and Investments sectors has been greatly influenced by McKinsey’s research. This White Papers refers, in particular, to McKinsey’s June 2018 paper "A vision for European life insurance: The time for bold actions has come", and to their 2016 and 2018 Insurance Cost Benchmarking reports.

One of their strongest messages has been on the cost reduction imperative facing the Life and Pensions sectors. Given life insurers’ traditional reliance on fixed-income investments, nearly two decades of low interest rates have taken a toll on profits: the sector is now barely covering its cost of capital.