Future of Insurance:Insuring the 100-Year Life

| 20 Nov 2017

A child born in the developed world today has a very good chance of living to the age of 100 and beyond. At the same time that life expectancy is increasing, we are seeing rapid changes in the areas of health and technology. What does all of this change mean for our consumers - and, for those born in today's world, what will the 100-Year Life be like? Swiss Re's Head of Life & Health Products Asia, Ms Daisy Ning explores.

Longevity is not a new phenomenon: statisticians have seen ageing populations coming for a long time. In Asia, an additional 15 million people will reach 65 years each year in the next decade. According to Swiss Re estimates, the number of elderly in Asia will nearly double between 2010 and 2030, from 288 million to 572 million. With falling fertility rates and lower old-age mortality, 10% of Asia's population will be 65 years old or more by 2025.

Insurance makes up only 5% of ageing wallet today

While ageing populations are not a recent trend and should be celebrated as a success for humanity, not enough has been done by business, governments and individuals themselves to prepare for the financial impact. Swiss Re’s own research projects that total healthcare costs in Asia-Pacific will increase to US$2.7 trillion by 2020. Even if Asia-Pacific governments and societies continue to fund healthcare expenditure as a stable share of GPD, there will remain a sizable gap of US$197 billion by 2020.

Swiss Re research also shows that most people are not in a position to fund their own future healthcare needs – hardly surprising given that insurance only makes up 5% of the ageing wallet today.

Advances in medicine and technology

So, how will societies fund longer lives? And will people be in a financial position to be able to enjoy the extra years that they live? In order to fund our ageing societies, it will be necessary for our industry, along with healthcare providers and governments, to form public-private partnerships as the challenge is too big for one party to solve it alone.

Advances in medicine and technology provide some cause for hope and have the potential to drastically alter peoples’ health, the way that people are treated and how that is paid for. With medical advances like liquid biopsy and advances in genomics, those who live the 100-Year Life will likely do so in a world where the risk of some of the most catastrophic and costly illnesses such as cancer are identified much earlier and can be managed.

Similarly, lifestyle diseases such as diabetes should be better detected and managed as people will likely be monitored continually and their health records – which would be kept securely in the cloud – automatically updated to show their health status.

Health insurance in the future

Those living the 100-Year Life can also expect a very different relationship with our industry. In the future, insurers might know what kind of policies consumers need according to their lifestyle, genes, hobbies and work risks.

Clients would be free to add personalised protection on top of their government-based healthcare mandatory scheme, and at any time they will be able to access a marketplace of personalised insurance products on the channel of their choice. And whenever they are unsure, their AI agent will be ready to advise.

Reinsurers will support insurers to fine tune how they model and predict risk, building dynamic underwriting and preventive risk management models enabling dynamic and real time pricing for each of their consumers. Reinsurers will also help to consider new areas of protection, reducing dramatically the global protection gap by accessing more risk pools. Lastly, reinsurers will automate health and claims processes which – supported by progress in biotechnology and medicine – will make it more affordable than today.

Need for innovation imperative

The collision of three major forces – longevity, health and technology – has created a more complex operating environment for our industry than ever before.

While future-gazing and imaging what it will be like for those living the 100-Year Life highlights some of the major possible impacts for our industry and the people we serve, there is much uncertainty around how things will ultimately pan out. Through all this uncertainty, however, one thing is crystal clear where our industry is concerned: the need for reinsurers and insurers to work hand-in-hand to innovate has never been greater.

This article first appeared in PIC Daily, Asia Insurance Review’s live coverage of the Pacific Insurance Conference.

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