Three Scenarios That Reveal Where Your Life & Pensions Performance Gap Is Most Acute

Every life and pensions insurer faces the same macro pressures: tightening regulation, rising customer expectations, shifting longevity and morbidity assumptions, and a a protection market where advisers benchmark your critical illness (CI) product against competitors every time they write a case. But the way those pressures manifest depends entirely on the operating model underneath.

The Proposition Agility Index

The Proposition Agility Index maps five stages of proposition maturity across seven capability dimensions and can be explored in more detail in our whitepaper, The Life & Pensions Proposition that Delivers Its Promise.

The following three scenarios describe insurers at different points on the Proposition Agility Index. Most senior leaders will recognise elements of at least one scenario, and many will recognise all three.

Scenario A: The Slow Updater

A CI product was market-leading when it launched three years ago, covering 35 conditions at a competitive premium. Today, the top three competitors cover 60 to 80 conditions at a comparable price point. This gap was flagged by your product team 18 months ago. The update is still working through actuarial repricing, regulatory review, system configuration, and distribution rollout. By the time it reaches the market, the benchmark will have moved again.

Meanwhile, your adviser panel has noticed. New business volumes are down 12% year-on-year, and your retention team is fielding more cancellation enquiries than at any point in the last five years.

The root cause is not the product team who identified the problem early. The root cause is an operating model where changing a product definition requires a chain of sequential dependencies across actuarial, compliance, IT configuration, testing, and distribution, each operating on its own timeline. The total cycle time from concept to customer can exceed 18 months. In a market that moves quarterly, that is a structural disadvantage.

The Slow Updater typically sits at Stages 1–2 on the Proposition Agility Index (Static or Modular): product changes are project-led, configuration is monolithic, and distribution updates are manual.

Scenario B: The Compliance Firefighter

The product development team spends more time responding to regulatory change than evolving the proposition. IFRS 17 reporting consumed most actuarial and IT bandwidth for the past two years. The FCA’s Consumer Duty requirements forced a product value review across your entire book. Each change is handled as a bespoke project, with its own timeline, budget and system workarounds. The cumulative effect is that the product roadmap is 18 months behind plan, and cost-to-serve has risen 20% in three years while your proposition has barely changed.

The deeper issue here is not regulatory burden per se. Every insurer faces the same requirements. The issue is that the operating model treats each regulatory change as a bespoke exercise rather than absorbing it through configuration. The capacity consumed by compliance is capacity that cannot be directed at proposition evolution. The two compete for the same resources, and compliance always wins because it has a deadline.

The Compliance Firefighter has often invested significantly in modernisation but remains at Stage 2 (Modular) on the Proposition Agility Index: change velocity is quarterly at best, and regulatory response is still project-driven rather than configuration-led.

Scenario C: The Closed Book Drag

Four legacy policy admin systems support products that are no longer sold, but still carrying more than 200,000 policyholders, consuming 35% of the IT run budget. Every regulatory change must be applied four times, on four different platforms, with four different testing cycles.

Closed book customers receive a visibly lower standard of service: no digital self-service, slower response times, limited ability to adjust their cover. When advisers review these clients, they recommend switching. You are losing customers you have already paid to acquire, and your operations team is stretched so thin maintaining legacy that they have no capacity for transformation.

What makes this scenario particularly costly is the hidden opportunity cost. Those 200,000+ policyholders represent accumulated trust, established premium flows, and the lowest-cost growth opportunity in your portfolio. Those policyholders on a modern platform would become cross-sell candidates, retention assets, and advocates. Without it, they are a drain on resources and avoidable attrition.

The Closed Book Drag often coexists with pockets of modernity elsewhere in the business. The insurer may be at Stage 3 (Personalised) for new business but remains at Stage 1 (Static) for closed books  creating an internal agility gap that compounds over time.

Which scenario dominates your operating reality?

Most L&P insurers will recognise elements of all three scenarios. Which one is your primary constraint right now? This determines where your performance gap is most acute, where the protection gap for your customers is growing fastest, and where structural investment will deliver the greatest return.

These scenarios sit within a broader Proposition Agility Index strategic framework which maps five stages of proposition maturity – from static and product-led through to anticipatory and customer-led – across seven capability dimensions.

Learn where you sit on the Index, and what it takes to progress, in our whitepaper, The Life & Pensions Proposition that Delivers Its Promise.

Download it now to identify your path forward.