Generation zimmer frame
6 February 2018
The UK population is getting older. According to the Office for National Statistics (ONS), 18 per cent of people were aged 65 and over in 2016 – and this is due to rise to 25 per cent by 2046.
This increase will lead to profound changes in society including work, health and care provision, transport and housing. It will also impact the insurance industry.
Earlier this year the Institute and Faculty of Actuaries stated in a policy briefing that both life and non-life insurance products will be important in meeting the needs of an aging population.
“The protection that some non-life insurance products offer against unexpected costs could be of even greater significance once people are in retirement,” it stated. “Examples of this include home insurance, travel insurance and even pet insurance. These products should offer value for money and be affordable for older consumers. They should not be priced out of these markets.”
The report highlighted the case of travel insurance, where Age UK has found that 97 per cent of annual travel insurance policies impose an upper age limit for new customers.
“While there may be cases where age is determined to be a relevant risk factor, insurers will need to strike a balance between meeting the needs of an aging population and ensuring that pricing is set in all customers’ best interests,” the IFA said. “Life products which offer protection against longevity risk are important among an ageing population. Without longevity protection there is a risk that if people underestimate how long they are going to live, they could run out of money before they die.”
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As such, the life insurance sector is getting more sophisticated in gathering information and big data on policyholders, looking at areas such as lifestyle factors, exercise and health to gauge life expectancy. The sector also needs to be more proactive in creating new products to help people adjust to living and working longer.
One suggestion in a recent PwC report, The Opportunities of an Older Europe, was the offering of integrated health management packages as companies’ sickness and disability risks increase as a result of an older workforce. This could include wellness programmes, healthcare and specialist follow-up services to help employees back to work or another workplace more suitable to their capacities.
It added that employers and employees would also need to make provision for carers’ leave such as income compensation as they take more time off to look after sick and elderly relatives.
In pension and investment PwC said clients will demand more services in the structuring of their pension plans and asset-liability management. There will also be more opportunities for long-term care and funeral insurance.
“We need to respond to an ageing person’s different needs, from Zimmer frame insurance cover to tax-efficient divestment opportunities through their property and estate,” says Bas van de Pas, PwC partner.
Aviva, meanwhile, says it is trying to proactively encourage older workers to put more of their working income into their pensions to gain a more comfortable retirement. “We need to be more engaged with people to make the needed changes in their savings behaviour. The pensions industry is in the stone age when it comes to digital technology, so we are creating apps where people can monitor their pension savings 24/7,” explains Alistair McQueen, head of savings retirement at Aviva. “We are also trying to encourage companies to take on more older workers. They need to look at promoting more flexible working options, carers’ leave and mid-life career reviews where people can talk about their lifestyle and retirement aspirations and financial management concerns.”