The world's largest life insurers, 2025

AI rollout

Life insurers across the globe are contending with a fast-changing environment marked by regulatory uncertainty and market volatility, as well as the challenges and opportunities that come with advancements in AI.

KPMG US insurance sector leader Sean Vicente said in an interview that while AI is useful for eliminating mundane, repetitive employee tasks, one of the biggest obstacles to transformation as it relates to the new technology is "resistance to change."

"It can sort of have that exact opposite effect, creating fear [for employees] and not understanding what their role is after AI," Vicente said. "So we're seeing some of that change management."

Life insurers have been discussing their use of AI and how it is becoming integral to their business practices. For example, Aflac Inc.'s President and Representative Director of Aflac Life Insurance Japan, Masatoshi Koide, said that generative AI is being used to undergo a digital transformation in Japan.

Aflac Japan rolled out "digital human avatar services" in August, which are able to respond to customer inquiries. Koide also said during the company's second-quarter earnings call that Aflac is ahead of its original goals around implementing GenAI and noted that the technology should reduce company expenses.

Ramnath Balasubramanian, the global co-leader of McKinsey & Co.'s life insurance and retirement industry practice, said in an interview that the life insurance industry has increased its expense ratio over the last two decades, while other adjacent sectors such as property and casualty and asset management have seen improvements.

"With... the acceleration of AI, there is hope and promise that the industry would be able to bend its productivity curve and efficiency curve," Balasubramanian said, noting, however, that AI is still in the early stages of use.

Stronger AI regulation of insurers is also likely on the way. In the US, the Senate Committee on Banking, Housing and Urban Affairs held a hearing in July to determine how to best approach AI regulation across the financial system, with members from both sides of the aisle agreeing that there needs to be a regulatory framework of some sort that addresses AI issues.

The National Association of Insurance Commissioners passed a Model Bulletin on the Use of Artificial Intelligence Systems by Insurers in the fall of 2023, which has since been adopted by about half of the US states. The NAIC is continuing to analyze the use of AI across sectors, conducting AI studies and collaborating with state insurance departments to consider what further regulation might be necessary.

Geopolitical, regulatory uncertainty

As conflicts across the globe develop and evolve, geopolitical uncertainty is expected to impact life insurers in the next several years, according to Balasubramanian.

"If you're a multinational insurer who's operating in multiple geographies, particularly in some of the geopolitical hotspots, that has ramifications for the business," Balasubramanian said. "Even if you're not directly operating outside of the US, there are second and third-order effects of what's happening in geopolitics."

Balasubramanian also noted that regulatory uncertainty in the US, Bermuda and other jurisdictions is causing shifts in the industry.

"I would say it has been a period of a lot of uncertainty over the past 18 months, and I think it will continue to be extremely volatile and uncertain over the next one to three years, and insurers will need to plan and adapt to that," Balasubramanian said.

The US government has also been implementing unexpected regulatory changes, including wide-sweeping tariffs and reversals of previous legislation related to environmental protections.

For the world's second-largest life insurer, the key to weathering global trade disruptions triggered by US trade policy is geographic diversification. During Allianz's first-half earnings call, CEO Oliver Bäte said that global growth tends to shrink with trade conflicts.

"Therefore, it is very important for Allianz to continue to diversify ... globally," Bäte said. "It is important we keep on diversifying and [that] does not mean doing stuff that is mediocre but being very strong outside of the eurozone."

Unlocking deals, investments

Several recent events and rule changes are expected to potentially open doors for life insurers in investments and dealmaking.

In Europe, a group comprised of Allianz, BlackRock Inc. and T&D Holdings Inc. is acquiring a majority of German life insurance consolidator Viridium Group GmbH & Co. KG for roughly €3.5 billion in a deal that is projected to close in the second half of 2025. The acquisition is widely expected to help unlock closed life transactions in the wider European market, as Viridium would be able to resume closed life deals.

Through the deal, Viridium's buyers will gain exposure to the company's acquisition of closed life books. Europe's life insurers share a similar philosophy of wanting to free up capital by selling or reinsuring closed books of business.

Meanwhile, in the US, life insurers are excited about the idea of allowing access to private market investments within defined contribution retirement accounts.

Principal Financial Group Inc. and Voya Financial Inc. have expressed enthusiasm about the change, which was supported by an Aug. 7 executive order issued by President Donald Trump, which states that "every American preparing for retirement should have access to funds that include investments in alternative assets." Trump defined alternative assets as those including private market investments, real estate and holdings in "actively managed investment vehicles that are investing in digital assets."

Voya joined forces with Blue Owl Capital Corp. in July in a partnership intended to expand offerings for its 401(k)s, something that Jay Kaduson, CEO of Voya's Workplace Solutions segment, said puts Voya in a "better position" to fill what he called "an expanding need of our customers and plan sponsors."