As life expectancy increases and the number of newborns declines, many societies around the world are growing older, with almost a quarter of global population expected to be over 65 by 2050. With societies facing challenges in funding their ageing needs, the insurance industry has an opportunity to become a larger part of this business segment if it finds new relevant and attractive solutions, examines Swiss Re in a new report.
The ageing trend is global but some Asian countries are leading the way – although others are catching up quickly. In Japan more than a quarter of the population are already 65 or older and, while China’s economic miracle over the past 20 years has been fueled by a high proportion of the population being working age, its society is now ageing faster than any other in the world.
So far, societies have been very successful in helping people to stay healthy for longer but the flipside is that governments and individuals themselves are now grappling with how to fund their ageing societies. Swiss Re’s "Who Pays for Ageing" report looks at six markets, including Japan and China, in terms of both the funding gap and solutions for how insurers can help provide financial security to seniors.
“The financial models used by governments, individuals and the insurance industry have not kept pace with changing population demographics,” said Ms Sohila Kwan, Head of Health & Medical Solutions at Swiss Re in Asia. “The industry needs to think differently when it comes to healthcare funding – both in terms of the solutions we provide to our customers and our willingness to form joint solutions with governments and others.”
The report applies the concept of an ‘Ageing Wallet’ to compare the amount spent on funding the lives of people over age 65 across three major funding sources: society, savings and insurance. While the composition differs by market, what’s consistent is the fractional share of insurance which accounts for merely 5% on average.
“Japanese insurers have successfully grown their share with products for critical illnesses and in China we’re expecting demand for private “live well” solutions to increase,” Ms Kwan explained.
“There is an opportunity for our industry to help fund longer lives and, in doing so, be part of the solution to one of the biggest challenges facing many Asian countries,” she concluded.
The "Who Pays for Ageing" full report is available here on Swiss Re's website.