Global Ageing

As life expectancy increases and fertility rates
  decrease in many countries, there is added pressure
    on social insurance systems supported by governments.
      The Geneva Association explores how the insurance industry
        can support governments and individuals in financing
           retirement and age-related health costs.

Global Ageing

As life expectancy increases and fertility rates
  decrease in many countries, there is added pressure
    on social insurance systems supported by
      governments. The Geneva Association explores
        how the insurance industry can support
          governments and individuals in financing
            retirement and age-related health costs.

Global Ageing

As life expectancy increases and fertility rates decrease in many countries, there is added pressure on social insurance systems supported by governments. The Geneva Association explores how the insurance industry can support governments and individuals in financing retirement and age-related health costs.

RESEARCH REPORT

Annuitisation: Retirement Income that Lasts a Lifetime

The research paper, published in July 2018, stresses that increased life expectancy, low fertility rates and low interest rates are putting extreme pressure on government-supported retirement plans, which leads to a reduction of benefits for people going into retirement. More and more individuals today are compelled to provide suitable retirement funds for themselves.

The risk of people outliving their retirement savings represents a threat to their standard of living, meaning many could lapse into poverty. The insurance industry can help—it is the only industry that accepts longevity risk as a core business, and it is a long-term provider of lifetime annuities—an insurance that a person will not outlive their retirement savings.


Read the report

The report examines annuitisation schemes of occupational retirement savings, known as Pillar II, in the U.S., U.K. and Switzerland. The paper finds that the U.S. system has been transferring retirement risk from employers to employees, while the U.K. has provided more freedom for retirees and put more pressure on the government. The Swiss system has features that cause the average Swiss employee to save more for retirement than his or her counterpart in the U.S. or U.K.

Whilst different countries have different needs, policy measures to prevent people from outliving their retirement savings could be based upon three principles: automatic enrolment of employees into an occupational pension plan, automatic escalation of contributions with age and duration of employment and some level of mandatory annuitisation.

The case for a new social contract for retirement: Alexander Wynaendts

ONGOING STUDY

Why People Do Not Buy Insurance

The Geneva Association took on the task of shedding light on why people do not buy insurance, using a survey to leverage insights from behavioural economics. For this joint project with the Protection Gap research stream, Edelman Intelligence designed the survey and applied it to 7,000 people in seven developed markets (France, Germany, Italy, Japan, U.K., U.S. and Switzerland). Additionally, 49 people in the seven target markets were interviewed to dig deeper into personal behaviours that influence the purchase of insurance.

The results of the three phases of the survey were consistent in highlighting three main causes for why people do not buy insurance: distrust, uncertainty and misunderstanding. Two initial research papers presenting the survey’s findings are scheduled for publication in the second half of 2019. The first paper will focus on non-life insurance and the second on life insurance.

CONFERENCES

2nd ANNUAL LIFE EXECUTIVE ROUND TABLE (ALERT)

The event was held in London in May 2018 and brought life insurance executives together to discuss long-term care insurance and what caused early products to fail. Some identified causes include assumptions on lapse rates and expenses, as well as poor underwriting and onset rates. One potential solution, therefore, is to restructure products altogether. There is also a need for simplified products, agents who explain them better, and increased financial literacy.

While the impact of digital technologies on insurance is a popular topic, a disruptive shift in the life insurance industry within the next few years still seems unlikely. There is consensus that it will take more time before digital technologies replace existing administrative systems and drive the development of new products in the life and pension businesses.

15th GLOBAL AGElNG CONFERENCE

Under the umbrella theme Long-term Care and the Behaviour Behind Insurance Purchasing, the event took place in Paris on November 2018 and was hosted by SCOR.

With ageing populations comprising a greater share of the world’s population, long-term care insurance products should be in high demand. However, early products did not perform as expected, making many companies and individuals wary of them.

Behaviours driving insurance purchase are complex. Even when customers know the benefits of being insured, something other than price prevents them from taking up cover. Behavioural economics helps shed light on how ‘irrational behaviour’, as it is known, determines purchasing patterns. If people can be ‘predictably irrational’, insurance business models need to take this into account.


Ronnie Klein, Director of Global Ageing, presents at the 15th Global Ageing Conference, hosted by SCOR

Robert Eaton, Milliman; Pierre-Yves Le Corre, JeSuisBienAssuré; Ilan Cohen, SCOR; Olivier Cabrignac, SCOR