The population is getting older and people are living longer. This represents an opportunity for insurers – an opportunity they’re not yet taking.
A recent report by the
Swiss Re Institute has again highlighted the challenges – and opportunities – to the insurance industry of the aging population. The over-65 population is expected to grow by 50% from 2015 to 2050.
Yet insurance globally has just 5% of the market share of the $11 trillion aging wallet; while in the US, the domestic insurance market – the largest market share internationally – still has only 11% of its $3.1 trillion wallet.
Domenico Savarese, head of aging at Swiss Re, said the industry needs to re-evaluate its approach to insuring the elderly if it is to capitalize on that aging wallet.
“It needs to be made relevant to consumers,” he explained. “If the product today exists and people don’t buy it, then something must be changed. There are a number of insurance solutions already available, but are they really addressing all the needs that people have? Are they too big to solve one problem, or are they too small? I think that’s the next level of sophistication that our industry needs to [look at]. How can they be made more relevant, I guess, is the real challenge for us.”
Insurance for the over-65s could include any number of coverages, including long-term care, emergency medical, savings “decumulation” support, or other customized approaches.
Savarese said insurers need to become more customer-centric to pick up and retain the aging wallet.
“We do believe that customer-centricity is an area where insurance needs to step up. How do you become more relevant? ... We argue that you need to be really understanding what people need,” he noted. “The share of insurance [in the US] is 11%. Do we wish it was higher? Clearly. We argue it can be higher, because there is value that can be unlocked by insurance by managing better the uncertainties that will happen as we age. As an industry, I don’t think we are doing enough.”
The report poses more questions than answers. But the important question implied throughout is: what can the industry do to improve its offering to the aging wallet?
“By addressing the need for greater resilience of the over 65s, the industry could access an underserved market,” the report stated. “While the number of traditional insurance customers (those aged 30-49) in the developed world will fall by about 40 million, the over-65 population will grow by 116 million between 2015 and 2050. That’s a 50% increase, and a market ripe for opportunity.”
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