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Old is gold

Source: Asia Insurance Review | Oct 2019

The idea that seniors represent an opportunity for insurers goes against traditional thinking in the industry, although the demographics of a rapidly ageing Asia demand a change in mindset. We get the reinsurance perspective from two life reinsurers on what needs to be done to exploit the opportunities that ageing presents to the industry.
By Ridwan Abbas
The ageing of societies is a phenomena that is happening at an accelerating rate around the world, and especially here in Asia – with the number of people above 65 projected to reach 450m in the region by 2035. Two-thirds of this population will live in China, while South Korea, Singapore, Thailand and Hong Kong are among the world’s fastest ageing societies. 
In a recent report by Swiss Re titled ‘Who pays for ageing?’, insurance has only a 5% share globally on average when it comes to funding the needs of seniors. The other 95% is paid for by the state, individual savings or the family. 
“The current private insurance’s share of the average ageing wallet is extremely low – 7% in Japan, 4% in Korea and only 2% in China. This is a global phenomenon rather than merely an Asia problem in funding the needs of the ageing population,” Swiss Re managing director – head of life & health globals & South Asia Marianne Gilchrist told Asia Insurance Review
While governments are keen to spread the financing load to the private sector, the take-up for private insurance is still low and there is a lot more to be done. Pacific Life Re managing director (Asia & Australia) Andrew Gill believes the industry needs to put in more resources and thought in addressing the unmet needs of seniors. 
“Insurance products in the market today generally cater to young people whether explicitly through product features or implicitly through product design. For example, there aren’t many annuity products in the market and underwriting questions ask about conditions that are prevalent in seniors but doesn’t mean they are uninsurable lives. 
“Overall, this presents a big opportunity for insurers and reinsurers to introduce protection products that are more suited for this segment of society,” he said. 
Ms Gilchrist believes conditions are ideal for insurers to make a bigger impression in this market segment – aided by technology. 
“Advancements in the broader health and technology ecosystem provide exciting opportunities for (re)insurers to develop meaningful life and health protection solutions for an ageing Asia data and platforms can help us access segments that we have not been able to reach before,” she said. 
Indeed, ‘ElderTech’ (technology focused on the needs of seniors) is a rapidly growing subsection of InsurTech, reaching into homes and care facilities to track movements, falls, medication compliance and more. As ageing trends change, the data that can be subsequently harnessed is valuable in developing new products, refine pricing and develop new strategies for this market segment. 
Segmenting the market
It’s been said that 60 is the new 40. Today’s 60-year-olds certainly cannot be compared to sexagenarians of previous generations. In much of Asia, they are generally more active than those in the past and are in better physical health. 
The way in which insurers look at the ‘seniors market’ is rather dynamic, and the industry is having to review how it views this segment based on the current contours of the market. More Asians than ever are living past 80 with reasonable health, and the age at which a person becomes ‘old’ is occurring far later than in the past. 
Additionally, the increasing volume of people who are ‘seniors’ have grown to the point that the long-lived are no longer just one market. 
On a whole, ‘seniors’ could be viewed as at least two distinct cohorts with their own specific market characteristics: Those of ages approximately 55 to 70 and those older than 70. And each of these two groups represent various levels of physical, mental and financial health. 
And while technology is a big part of the solution when it comes to serving the health needs of seniors, the generation currently over 80 may typically be less comfortable with IT. For them, it may be a question of training caregivers to use the technology on their behalf. On the other hand, those now in their 60s and 70s, are arguably more sufficiently comfortable with IT to use it on their own.
Products and services
From a product perspective, the industry has been making progress to address some of the needs of seniors in Asia. There are now dementia products in markets like Korea and Japan, as well as family-focused products in Hong Kong and Singapore that cover multiple generations including aged parents, said Ms Gilchrist. 
“At Swiss Re, we partnered with an insurer in Singapore to co-develop a first-in-market critical illness policy that covers three generations. The solution aims to relieve some of the burdens from the ‘sandwich generation’ – the group of middle-age adults who care for their ageing parents while also supporting their children,” she explained. 
Innovation has to be about making the products simpler so that it is easier for people to understand and relate to, felt Mr Gill. 
“In Korea for example, the industry has launched simplified (3/2/1 underwriting questions) critical illness products particularly to provide protection for this group. The products also include riders such as nursing care, surgery, and other benefits that are relevant for this group. 
In the Southeast Asian market, similar products are being developed aimed at providing education and coverage for seniors,” he said. 
Believing that senior applicants are primarily dissuaded from taking up insurance due to onerous underwriting requirements, Singapore-based NTUC Income introduced a more senior-friendly health underwriting questionnaire which requests only for health declarations that are most relevant to seniors. 
And as people live longer, they also will want to work for longer. Recently, Prudential Singapore announced that its customised group insurance plans will now provide protection for employees up to the age of 100. Typically, insurers offer plans that cover employees up till 75 years of age. 
In a job market where retaining senior talent and building an age-friendly workplace will become a major priority given the ageing trend, this could potentially be another area of opportunity for insurers. 
Long-term care insurance
When it comes to protection during old-age, the most common products would be health insurance, whole life insurance and annuities – although the latter has a low take-up rate in Asia compared to other regions. 
And despite several attempts to create demand for traditional long-term care insurance, the product has had minimal success in Asia – with the obvious exception of Japan. 
“One of the obvious market conditions that challenges the demand for long-term care protection in some countries in Asia such as Singapore, Hong Kong and Taiwan, is the easy access to foreign fulltime domestic helpers. Many consumers prefer at-home care provided by helpers rather than nursing home care,” said Ms Gilchrist. 
“In other Asian countries like Japan and Korea where hiring foreign domestic helpers is less common and more expensive, we expect a more acute demand for holistic long-term care insurance,” she added. 
Beyond paying claims
Today, insurers are increasingly looking to wrap added services to their products, and this is particularly relevant to seniors whose needs extend beyond merely a financial pay out. This could extend from ageing in good health, ageing in place or remaining connected to society. 
“For the aged group, maintenance of lifestyle is an important aspect to consider. Services such as nursing care, concierge services, priority medical treatment, second medical opinion, discounted medications (via partnership with pharmacies), and other similar benefits are becoming increasingly popular in Asia,” said Mr Gill.
Disease prevention and wellness is another obvious area where life (re)insurers have been chipping away at for some time. Chronic diseases, which are avoidable, are on the rise globally. Hence, insurance products are starting to be designed with prevention in mind. 
Ms Gilchrist points to the reinsurer’s recent partnership with a Thai insurer to help Type 2 diabetics improve on their chronic health conditions, as a case in point. 
“This health protection product leverages personal health data such as blood glucose levels, alongside dynamic underwriting approach to provide on-going financial incentives for policyholders to improve their health. It is also aided by health and wellness management apps that enable Type 2 diabetic policy holders to manage their own health,” she said. 
Besides services for physical health, monitoring of psychological wellbeing is another key area that requires attention. 
“Services that support the social and emotional aspects of retired people and their caregivers are where we would like to see further developments, as it can be physically and emotionally stressful for family members when taking care of their frail or sick parents,” she said. A 
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