We all want to live longer lives – but there’s no doubt there can be an economic hit in doing so. While difficult to quantify, an ageing population can impact health and social care, as well as expenditure on pensions. However, what is the impact on the insurance industry?
A new report by the Geneva Association, which included insights from a survey of about 15,000 individuals across 12 countries worldwide, has highlighted how insurers are adapting to the challenges and opportunities of an ageing global population.
The association’s Insurance and the Longevity Economy: Navigating Protection in the Era of 100-Year Lives found that longer life expectancy and declining fertility rates resulted in fewer working-age individuals being available to support retirees, creating financial and healthcare pressures that insurers are increasingly expected to address.
While many acknowledge the financial and healthcare risks associated with longer lives, the report suggested that individuals often overrate their level of preparedness. It revealed differences in how people perceive longevity, with respondents in developed countries generally underestimating their life expectancy, with those in developing nations overestimating it.
Insurance is identified as one of the three main sources of support for managing longevity risks, alongside family and government.
The report outlined ways insurers can develop solutions that integrate health, financial security and longevity protection. These include enhanced group healthcare plans that promote preventive care and savings mechanisms that allow for a flexible transition between working and retirement phases.
Jad Ariss, managing director of the Geneva Association, said: “Insurers are uniquely positioned to help people navigate longer lives. Our report recommends ways to ensure that extended life spans are not just longer, but healthier and more financially secure.”
According to the report, while interest in insurance is high, attracting demand is proving more challenging. For example, it found that 44% of those surveyed were interested in long-term care insurance, but this was the least owned insurance product – at just 23%. Affordability was touted as the main concern.
The report goes on to encourage insurers to be more flexible in the products they offer – it suggests auto save features, like round-ups, auto escalation, where savings contributions rise automatically annually, and auto rewards that offer incentives.
“We’re caught in a paradox: short-term insurance cycles versus the longevity economy’s marathon needs,” suggested Nils Reich, of AXA, in the report. “We need to reconsider traditional models of care and insurance to guarantee the sustainability and affordability of health insurance. In this new reality, the cornerstone of prevention must be at the core of the insurance model.”
The report suggests that insurers have a significant role to play in promoting healthy living through incentives, and that insurers could also look to form partnerships with healthcare providers, mobility and hospitality companies that may ultimately reduce the need for long-term care.
It concludes that there are significant opportunities for insurers to enhance their relevance – but that will mean embracing innovative products and services.
