Life insurers in Australia and other mature markets are struggling to meet customer expectations, according to Capgemini.

The consultancy’s World Life Insurance report says one in three retail policyholders struggle with complex terms and 27% do not like lengthy application processes. 

After buying a policy, one in four retail and group customers express frustration at long waiting times, while 23% are irked by a lack of self-service options for policy changes.

The claims process also poses challenges, primarily due to a lack of digitisation. One-third of retail policyholders say they face a complicated application process, with 27% noting a lack of empathy during the claims experience.

The report says the industry is rethinking its customer engagement after penetration rates in mature markets dropped.

“Against high inflation and macroeconomic uncertainty, today’s consumers are only mildly interested in traditional life insurance products,” the report says.

“Rising interest rates benefited insurers’ recent financial performance, but short-term gains cannot conceal the long-term impact of sluggish growth.”

However, efforts to improve customer experience have stalled for most insurers, hindered by legacy systems, limited adoption of emerging technologies and regulatory scrutiny, Capgemini says.

Insurers know they need to modernise operations, but only 41% met or exceeded their latest transformation goals.

Capgemini says a successful transformation involves “customer journeys” that build trust, demonstrate long-term commitment and maximise customer value through a combination of AI-augmented human interactions and operational efficiency.

“The growth potential is significant. Now is the time to restore the relevance of life insurance.”

The report is based on surveys of consumers and industry executives in May and June.