Tag Archives: pension insurance

The Future of Life Insurance

In its most recent report, “Tomorrow’s World; the Future of Aging in the U.K.,” the International Longevity Centre, a think tank focused on longevity, population and aging, painted a gloomy picture. The report says:

  • That the social care system is crumbling, and social class will heavily affect the life experience of the aged.
  • That housing and planning are inadequate to meet the needs of an aging population.
  • That individuals are underestimating their life expectancy and are likely to run out of money in old age.
  • That older people will suffer (and perhaps die) of different things: Where once the issue was heart and respiratory diseases, now it is likely to be illnesses of non-communication such as dementia.

It’s a worrying vision – one that perhaps is replicated in many other countries. The report recommends a bold 10-point action plan. It says:

1. Health must find a way to be more responsive and preventative.
2. Government must make progress in delivering a long-term settlement to pay for social care.
3. Savings levels for working age adults must increase.
4. The average age of exit from the workforce should rise.
5. The number and type of homes built should be increasingly appropriate for our aging society.
6. Government should make progress in facilitating greater risk sharing in accumulation of retirement income.
7. There is a need for a more informed older consumer.
8. Our aspirations for retirement must be about much more than us spending more hours watching television.
9. Businesses should better respond to aging.
10. The social contract needs to be strengthened between young and old.

Doesn’t the life and pension insurance industry have a part to play in almost all of this road map? Is there any reason why the industry should sit on the sidelines?

Here are five issues for the industry:

  • Insurers need to continue the shift from being reactive to being proactive – and must share the benefits with policyholders. Stakeholder buy-in through effective communication and enlightenment is critical – and it is increasingly becoming urgent.
  • Can insurers – on behalf of their policyholders, who are inevitably with them often for decades – influence issues related to home building and planning? I wonder how I would react if I really thought that my life and pension insurer was representing my interest to a point that it was lobbying about this type of stuff on my behalf?
  • The need for cooperation between the private and public sectors reinforces the need for empathy by both government and private insurers toward each other, perhaps with tacit agreement that they (we) are all in this together.
  • As the average age of workers increases, and some seek an alternative to watching TV or just trying to make ends meet, I wonder whether there is propensity for more workplace accidents. Isn’t there an employers liability/workers’ compensation angle to consider?
  • And, of course, how do we make life and pension insurance attractive to those starting their work life? Doesn’t the industry really need to make insurance both more relevant and fashionable?

Don’t insurers need to communicate better, engage differently, think more about the changing demographic footprint and generally step up the pace? All the innovation seems to be going into P & C insurance, but we can’t allow that to suck the energy from life and pension.

After all, having a “connected bedpan” as part of the Internet of Things might be useful for some – but don’t we need to be bolder than that in our thinking?

Pension Insurance: Just a Stairway to Heaven?

My eye was caught recently by a small classified ad in the Miami Herald for a care establishment for the elderly called The Door of Heaven. It’s in Fort Lauderdale, if you don’t believe me. The title is a little presumptious and maybe assumes that everyone staying there has pre-qualified for the next (better) life. Less of a care home, more of a departure lounge, with the background music probably falling somewhere between Andy Williams and Doris Day.

That same evening, one of the major life insurers ran an ad on TV that took a rather more sophisticated (and expensive) approach. The ad talked about the company’s reinvention of its pension products to meet the needs of a changing world. The ad was good brand positioning, even if it didn’t tell me exactly what the company had in mind. But at least they are thinking about the issues.

I wondered whether, at the end of the day, we all have the same requirements when we retire. Or will we eventually expect a degree of customization to meet our particular expectations? The recent unforeseen decision by the UK Government to allow policyholders to withdraw their savings as a lump sum in full or part when they retire would seem to provide some new flexibility.

In the UK, at least, policyholders can now choose to spend their pension savings on a new sports car, a cruise or even a Gibson Les Paul guitar while they are young enough to enjoy it, rather than save it up for future needs. Sounds like it’s worth thinking about, at least.

Ultimately, there are probably limits to the degree of pension options available to us, if not as individuals, then as market segments. Perhaps those customer segments will be based on decade of birth.

It seems to me that those born in the era of “flower power” who save their money for future care might have different expectations than do hellraisers of the Led Zeppelin era. Happiness for retired hippies may involve having flowers in now-greying hair. Fans of Zeppelin may demand their carers to provide them with denim-covered Zimmer frames. Dylan fans in their twilight moments as they pass on to the next world will expect to be serenaded by “Knocking on Heaven’s Door.” And for those whose faculties aren’t what they used to be, perhaps a touch of the Stones’ “I Can’t Get No Satisfaction”….

Personally I’m more of a Who man. When Roger Daltry sang “I hope I die before I get old” in 1965, I don’t suppose he was thinking about the complications of pension schemes. I’m not a fan of old age, but, as they say, it’s better than the alternative.