Demographics in Insurance - Thematic Intelligence

Demographics in Insurance - Thematic Intelligence

Summary

The nature of the demographic impact on companies has two aspects: shifting consumer preferences and population dynamics. Insurance companies will need to adapt to the shifting preferences of Generation Z and cater to an expanding elderly population. Factors such as ESG performance and online capabilities will be vital to building brand loyalty among younger cohorts. Meanwhile, products and services that respond to age-related illnesses will drive winners and losers in health and life insurance segments. Leaders and disruptors in this theme can be characterized as pioneering in areas related to the changing demands of younger generations, such as digitalization, embedded insurance, and ecommerce. They can also be those that are well-positioned to take advantage of the aging population demographics of many major economies via solutions tailored specifically for those in or nearing retirement.

With a greater proportion of the population beyond retirement age, pensions will need to be larger to cover living expenses for a longer period. With the growing pressure on public finances and state pensions, private pension providers will play a massive role in alleviating the financial challenges post-retirement consumers may find themselves facing in the future. Meanwhile, the next decade will see a massive transfer of power and wealth from the departing boomers to young cohorts with very different habits and values. Cerulli Associates estimates that inter-generational wealth transfer could reach $68 trillion within 25 years, with profound consequences for capital markets, the skew of investment portfolios, and corporate values.

Additionally, urbanization has led to a rush to find and own housing within cities. As prices have gone up, many have been priced out of the market and forced into renting. The ensuing decline in homeownership rates has repercussions for the insurance industry in terms of policy uptake. Urbanization also has other implications such as heightened flood risk, emerging themes such as the gig and sharing economies, less healthy lifestyles and increased stress for urban dwellers, and challenges regarding the future of urban mobility.

Scope

• GlobalData’s 2023 UK Life and Pensions Survey suggests that over 50% of under-55s believe their retirement income will not be sufficient to cover their living expenses.
• Over three quarters of 18-24-year-olds consider sustainable investment principles important compared to just 32.9% of over-65s as per GlobalData’s 2023 UK Life and Pensions Survey.
• In England, the average student debt upon repayment was GBP2,690 in 1999-2000. By 2021-22 it had increased 1,578% to GBP45,150.
• According to GlobalData’s 2022 UK Insurance Consumer Survey, 20.2% of UK term assurance customers purchased the product because they had recently bought a new house. This was also true for 13.3% of income protection customers.

Reasons to Buy

• Determine how different ideologies of younger consumers will encourage a change in approach for the insurance industry in targeting this cohort.
• Identify features of insurance for which Generation Z and millennials have a greater preference due to differences in living styles.
• See how insurtechs and incumbents are adapting strategies to resonate with and market to this demographic.
• Understand how pension provision needs to change in the face of aging populations.
• Configure ESG strategies to fit in line with changing customer preferences before the great wealth transfer brings widespread change to investment markets.