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Working towards 100

Can insurers rise to the challenge of an ageing population?

Talk of how our population is growing and ageing may be losing its shock factor. The association between “ageing society” and “demographic time bomb” is almost de rigeur, but it is yet to provoke meaningful change in societal habits or in the provision of insurance. So, what will change as our population and workforce gets older? How will that affect insurance products that are designed on current, entrenched, societal patterns of retirement and healthcare provision? Both of these seem less clear.

Statistics from the King’s Fund show that   by 2033, the number of those aged between 65-84 is set to grow by a third and those aged over 85 is set to double. According to the Office for National Statistics, the number of those aged 65 will grow in both absolute and proportionate terms, meaning a greater percentage of our population will be older and, probably, in work. Perhaps most strikingly, and to focus the mind on the social care conundrum, the Institute for Employment Studies has said that a third of people born today will live to 100. 

It is generally agreed that an ageing population will have widespread impacts on society. Most obviously we will likely see an increase in healthcare costs (the IFS has predicted that public healthcare spending will rise from  29% in 2010 to 38% by 2023), we will work for longer, have more career changes, phase into retirement rather than stop abruptly and more  of us will need care in later  life.  There  are likely to be many benefits of working longer - to employers, government and older workers themselves. As well as financing higher tax receipts for government, work and health can have a reinforcing effect on each other. But with people working longer, the need for them to remain healthy into later life heightens. This is a real challenge, particularly when you consider that, today, most people over 65 have at least one chronic health condition.

Most health and protection insurance policies (and mortgages) are aligned to retirement age, but this approach will come under scrutiny as retirement ages increase and become less defined. With increased healthcare over the age of 65 and more people requiring care it is hard to see how traditional insurance products can increase their exposure to older workers without adapting how they mitigate risks and provide products - particularly considering the low level of public awareness around the cost of care”. Therefore, the questions remains: will a fundamental shift in the insurance contract be needed and how would it happen?

With challenges also come opportunities for insurers – to work with their policyholders to predict risk, provide flexible products and further prevent individuals from falling out of work and help them return to work when they do. Increases in demand for support should come from individuals as they look to prolong their working lives and from employers as their workforces increase in age. Both will be looking for support to manage these shifts.

Can insurers rise to the  challenge  to  support an ageing population and to be relevant? What public policy changes will be needed? What is and can be done today and what will evolve with time? The ABI’s Annual Conference breakout session will look to delve into these questions and provide some answers.

Find out more at the ABI Annual Conference 2019. Book your tickets now.

Last updated 18/02/2019