February 17, 2016
The Future of Life Insurance
by Tony Boobier
All the innovation seems to be going into P&C. Life and pension insurers need to step up the pace by considering five key issues.
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?