Reimagining Longevity: From risk to opportunity
As policymakers around the world turn their attention to the difficulties caused by ageing populations, insurance companies must take a leading role in championing age-positive societal and economic transformations in order to harness the benefits of longevity for all. We must redefine ageing itself, as well as rethink the services insurers can provide to their customers.
The Geneva Association’s Health & Ageing Conference, hosted by MAPFRE in Madrid, on 20–21 September 2022, gathered experts for a lively and fruitful debate on the future of longevity and ageing, and how insurers can respond to the changes. Discussions offered insights from cutting-edge research on several topics including the impacts of COVID-19 on mortality and morbidity, the economic challenges and opportunities afforded by increased longevity, and the potential of insurers to support age-orientated innovation.
The following is a summary of the discussions and relevant takeaways for insurers.
Jad Ariss, Managing Director, The Geneva Association; Ignacio Baeza-Gómez, First Vice Chairman, MAPFRE.
Since 1960, advances in medicine and public health policy have caused global life expectancy to rise at a rate of four months per year, prompting fundamental questions about how we configure our lives as a society. It is apt that this conference is taking place in Spain, a country with one of the lowest birth rates and one of the highest life expectancies in the world, and in Madrid, the city that 20 years ago gave its name to the UN’s Madrid International Plan of Action on Ageing.
The challenge that faces us now is not just how to live longer, but how to live better and healthier – physically, mentally and financially. As a result of improved longevity, the boundary between life and health insurance is being blurred, and the responsibility now falls on insurance companies to expand their offerings for customers to include financial education and morbidity prevention. This demographic shift will necessitate a society-wide rethink of nearly every aspect of life, from wellness and education to pensions and retirement. Insurers are well-poised to help shape our ageing future for the better.
Moderated interview: Reframing Longevity – It is a certainty not a risk
Julia Randell-Khan, Consulting Fellow on the Inter-disciplinary New Map of Life at the Stanford Centre for Longevity, Senior Fellow at Encore and Director of The Purpose Xchange, The Age of No Retirement; Torsten Kleinow, Professor, Faculty of Economics and Business, University of Amsterdam.
As we transition into a longevity society, traditional societal structures, built to serve a shorter-lived population, are becoming obsolete. Longevity is not simply about tacking on extra time at the end of life, it will require adaptation of the whole of society to suit a longer life. While an ageing population brings certain challenges, longevity should be seen as an opportunity for change and progress.
Getting longevity-ready will involve a commitment to collaboration between policymakers, innovators, insurers and the public, as well as between generations. The insurance sector sits on a wealth of data and expertise, enabling it to lead the way on longevity preparations. Fresh ways of thinking do not always have to come from startups. Multinationals and established companies have the means and funds to invest in new technologies, and should aim to become dynamic centres for innovation. COVID-19 showed us how quickly companies can adapt when under pressure. Insurers should carry that enterprising spirit over into extending their provisions to include services and other products which are accessible to a wider public.
Session 1: From Pandemic to Endemic? Impact on longevity, health and social care
Matt Singleton, Global Life & Health Product Innovation Manager, Swiss Re (chair); Nicola Oliver, Director of Longevity & Mortality, Medical Intelligence; Stuart McDonald, Head of Longevity and Demographic Insights, Lane Clark & Peacock; Adelina Comas-Herrera, Assistant Professorial Research Fellow, Care Policy and Evaluation Centre (CPEC), LSE.
The pandemic has led to a spike in mortality and morbidity worldwide, causing a worrying deceleration in the mortality improvements seen in recent decades. Millions now live with long COVID, enduring a range of life-changing morbidities from diabetes to cardiac diseases.
COVID-19 also exposed and exacerbated the existing inadequacies of long-term care systems across the world. The future of long-term care lies in the hands of insurance companies, who must work with policymakers to enforce the lessons of the pandemic. The need for small-scale community care, better pay and training for care workers, coordination between sectors, and residents’ rights to a social and family life has never been more apparent.
The long-term consequences of the pandemic will be with us for years to come. Whether the potential learning opportunities and innovations resulting from it will outweigh the negative effects remains to be seen, and insurers must play their part in building a better future for all, not just the wealthiest.
Takeaways for insurers:
- Long-term care insurance should be part of an ecosystem of services that fosters healthy longevity.
- The distinction between health and social care is increasingly obsolete as people live longer.
- Insurance companies must work closely with governments and other companies to ensure that their products and services are up to date and provide adequate benefits to customers and society.
Session 2: Exploring Longevity Through an Economic Lens
Mike Mansfield, CEO, ProAge (chair); David Sinclair, CEO, International Longevity Centre; Juan Fernández Palacios, Director of Ageinomics, Fundación MAPFRE; Yvonne Sonsino, Global Co-Leader Next Stage, Mercer.
Over the past 60 years, life expectancies have increased by a staggering 20 years. Yet the major milestones – from starting school to retirement – have not been adjusted, bringing urgent economic challenges. We desperately need a new social model to avoid catastrophic levels of pension poverty and loneliness in the face of a rapidly ageing society.
The problem is not ageing or longevity itself, but premature retirement placing unnecessary limits on the overall productivity of the workforce. Leaders must realise that the way forward lies not in reducing the size of state pensions, but in embracing longevity and rethinking retirement itself. It is not just about working longer. Building greater adaptability into working life, establishing intergenerational teams and mentoring schemes, and encouraging innovation and creativity at all ages will be vital for navigating the longevity economy.
Much of the negativity around the longevity economy comes from the misconception of seniors as a largely passive group that exists outside of mainstream society. In reality, however, the high purchasing power of over-55s makes them significant drivers of economic growth. Provided that we move towards a society characterised by healthy and productive longevity, this spending power will only increase with life expectancy.
Takeaways for insurers
- Insurers are uniquely placed to direct societal change, for instance by demanding that corporate clients adopt green policies, or by funding anti-dementia research.
- To return to work, retirees need to feel their job is rewarding. Insurers face the challenge of coming up with non-monetary incentives for customers to continue earning into old age.
- Pensions alone cannot fund long-term care. It is in insurers’ interests to make it as easy as possible for clients to save money, through clear communications and saving by default.
Session 3: Understanding the Opportunity for Insurance and Preparing the Ground
Lukas Junker, Advisor to Board Member, Allianz (chair); Joaquín de los Reyes, Director Senior Generation Program, MAPFRE; Michael W. Hodin, CEO, Global Coalition on Aging; Roger Peverelli, Co-founder, Digital Insurance Agenda.
The move towards a longevity society necessitates fundamental changes in how health insurance operates. As we come to define longevity as improved quality of life across the lifespan, the focus of insurers needs to shift towards the provision of bespoke, holistic services for clients.
The customer base also needs to change as increased life expectancies open up new opportunities to attract less wealthy and/or younger clients who cannot afford to and/or are not yet thinking about supporting themselves through old age. New insurance products should aim to prevent physical, mental and financial ill health, through a combination of monitoring and diagnostic technologies and frank, supportive and informative conversations with customers.
Takeaways for insurers
- Insurance companies should remodel themselves as providers of an ecosystem of services, from disaster prevention technology to financial advice.
- Insurers’ interactions with clients need to move from transactional to relational.
- Insurers must recognise the diversity and individuality of customers’ needs, e.g. someone searching for insurance products on behalf of a parent in their care, or on behalf of their employees.
- Collaboration is key. Insurers should work with technology companies who are already producing silver-friendly products in order to maximise the potential of their products.
Keynote speech: China's Ageing Population and Strategic Opportunities for Commercial Insurance
Xing Xiao, Executive Director & Deputy General Manager, China Taiping.
China is ageing faster than any other country in the world: by 2050, a quarter of its population will be over 65. Relative individual poverty and a lack of pensions and social care for the elderly makes this a more challenging problem than in Europe or the U.S.
To address this, the Chinese government has vigorously promoted long-term care insurance, outsourcing this provision to private companies. The ʻbirth boom’ generation, who started to turn 60 in 2022, has accumulated comparatively large amounts of wealth since 1978, prompting insurance companies to think about how best to promote their products. This has resulted in so-called ʻcomprehensive solutions’ that combine healthcare with a private pension system. These solutions aim at alleviating the burden on younger generations created by the 4-2-1 family structure (families in which three generations, comprised of four grandparents, two parents and one child, coexist), as well as improving the quality of life of older generations.
To remain competitive and relevant, insurers will have to find ways to integrate new technologies into their services and expand their customer base. They will also need to work together to create better pension and long-term savings propositions for the future.
Moderated interview: Challenging Ageism
Adrita Bhattacharya-Craven, Director Health & Ageing, The Geneva Association; Andre Belelieu, Head of Insurance, Asset Management & Institutional Investors, World Economic Forum.
As well as engaging technical know-how, the jobs of the future will increasingly require analytical ability, emotional intelligence and critical thinking, all skills which are best honed over time. The way forward therefore lies in harnessing the potential of multigenerational workplaces through intergenerational teams and mentoring programmes. This not only builds resilience to financial shocks but has also been shown to increase GDP. Despite these benefits, surprisingly few companies have integrated this solution into their strategies.
Ageism is likely responsible for the reluctance of many companies to give older workers the time they deserve, yet it has not received the same level of attention as other forms of discrimination. Ageism carries with it many pervasive myths and misconceptions around ageing. To enact ageist policies against an employee is to devalue the very same skills, loyalty and experience that are so treasured in younger workers.
Mandatory retirement ages are just one example of policies that are both symptomatic of systemic ageism and contribute to misconceptions about age. While some countries have recognised the importance of flexibility and scrapped these, many (especially European) countries are more reluctant to even adjust, let alone abolish them. Continued employment brings greater financial stability for employees in their old age, and helps mitigate the detrimental impacts of loneliness. And, while governmental policy is typically slow-moving, insurers can act now to address this urgent issue.
Session 4: How Should Insurance Evolve to Support Longevity?
Adrita Bhattacharya-Craven, Director Health & Ageing, The Geneva Association (chair); Ana Villanueva, Chief Medical Officer, MAPFRE RE; Alistair McQueen, Head of Savings & Retirement, Aviva; Sandrine Coulange, Chief Health Officer, European Markets, AXA; Arne Holzhausen, Global Head Insurance, Wealth & Trend Research, Allianz.
Now is the time for a revolution in insurance provision. This will require a leap of faith from company executives and the sacrificing of shorter-term goals, but if insurers do not take the first steps towards a visionary, mutually beneficial solution, somebody else will reap the vast reward.
Insurers should embrace the trend towards healthcare management. Supporting customers to predict and prevent diseases, where possible delaying the onset of chronic conditions (acknowledging that chronic diseases may be an inevitable part of ageing), and focusing on effective management are relatively inexpensive compared to acute hospital or specialist treatments. Insurers may be reluctant to take these risks, but sophisticated monitoring technologies, including ʻphygital’ systems, can help ensure their investments yield results both in terms of health outcomes and sustainability of health plans.
The insurance sector cannot solve the ageing crisis on its own. An increase in economic growth, driven by innovation and digitalisation, will provide the backdrop insurers require to implement these revolutionary solutions. Necessity is the mother of invention and the current economic climate could lead to an increase in productivity, provided we are prepared to embrace fresh and flexible thinking. We have already seen how working from home and hybrid workplaces can bring huge positives to employers and employees, but we must also recognise that it does not work for all.
Takeaways for insurers
- An increase in the age of policy eligibility will be required in order to stay competitive.
- Living with chronic conditions will increasingly become the norm. Insurers need to find better solutions for delaying their onset and managing the risks.
- Rather than resorting to new investments, insurers should think about repurposing existing propositions to address the realities of living longer.
Creating the Right Policy Environment
Sergio Álvarez, Director General for Insurance & Pensions Funds, Spanish Ministry of Economy and Business.
Governments and regulators are well aware of the urgent need for an answer to the problems ageing populations pose to pensions and health systems. Schemes like the European Commission’s Pension Dashboard and national pension tracking systems will be important, though their success relies on the quality and availability of data, as well as the level of public engagement. National health systems will need to be open to new technologies in order to provide more personalised healthcare, and the care economy needs to be drastically overhauled and made a fourth pillar of the welfare state. Private management of pensions (with public promotion) is necessary to save the pension system.
The insurance industry has a responsibility to put consumers first, providing simpler, fairer and more transparent products alongside accurate data and sound advice. Despite the high level of competition between companies, their products are often hard to distinguish. Customers deserve and need a wider range of products to choose from to reflect the diversity of their needs. These changes will not happen overnight, but we must act now to avert disaster in the future.