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Adding spice to life insurance for the salt and peppers

Source: Asia Insurance Review | Dec 2020

Andrew Gill

These are unusual times. The sudden and now prolonged change to our ‘normal’ lives – the perceived heightened risk, and with it, anxiety – will make 2020 a ‘memorable’ year for many of us. However, with every challenge comes an opportunity, says Pacific Life Re’s Mr Andrew Gill.
In the life insurance industry, I see this as an opportunity for us to enhance our support for the community. In particular, by developing better products to meet the needs of those who are most likely to be impacted the hardest by this pandemic – the elderly.
Whilst the societies across Asia are as different as the cultures they represent, there are many common themes. In particular, due to ongoing advances in medical research as well as significant levels of economic growth and urbanisation over the last 30 years, a growing proportion of the population could be considered the elderly. Let’s call them the ‘salt and pepper’ population.
Change of focus
In terms of product development, to a large degree, life insurers have focused on the younger (the non-salt and pepper) population. To some extent, this move is understandable. A 25-year-old’s insurance needs will may span many decades and hence generate greater customer value than the equivalent member of the salt and pepper population. Furthermore, the underwriting process will generally be far simpler for a 25-year-old given that they are far less likely to suffer from any underlying medical issues or comorbidities.
However, this approach ignores a very material customer need. Given the amazing economic growth in Asia over the last 30 plus years, those of the salt and pepper population have been able to provide for their financial future like never before. 
Whilst many are now able to prepare for a reasonable standard of living in their later years, a significant health event can easily test their savings and financial resilience. Layer on top of this the harsh reality of the current economic environment impacting both savings accounts as well as the earnings potential of the children of the salt and pepper population (who may otherwise be able to support) and it makes it even clearer that financial resilience in this circumstance will be sorely tested.
Early planning
Anyone in this situation will want to have the best support that money can buy. For instance, cancer treatments that provide not just the hope of living for a few more years, but almost complete recovery, are becoming more and more the norm (and are being developed at a rate almost comparable to a certain vaccine). 
However, many of the salt and pepper population will find, likely at the wrong time, that they cannot afford this support when they most need it. Hence, it is imperative that life insurers find solutions to make the salt and pepper population more resilient to these risks and allow those unfortunate enough to claim to live their best lives possible. 
It is also worth noting that this need is hardly ‘niche’. Asia’s over-65s is the largest and fastest-growing market in the world comprising 365m in 2017, growing to 520m in 2027. So not only are life insurers potentially ignoring a considerable customer need, they are also missing out on a sizeable market of people who will be acutely aware of the risks of underlying health issues. 
At Pacific Life Re, providing insurance to the salt and pepper population is a key strategic initiative. In our view, for an insurer or reinsurer to address this gap adequately goes way beyond a product design rejig. A full consideration of the ecosystem used to deliver the product is needed, including holistic consideration of the distribution, use of technology, post-claim services and appropriately managing underwriting and pricing risks.
Making data work hard
In our case, a dedicated team incorporating product-development specialists, data scientists (there is a lot of salt and pepper population medical data out there), market researchers, actuaries, underwriters and our UnderwriteMe technology have worked together to create such a proposition with our award-winning Elderly Living Care product. Using a similar model and strong collaboration internally, insurers will also be able to ensure that the solutions they provide are holistic and ultimately successful. 
To conclude, I would like to make a ‘call to action’. Given the size and breadth of the challenge and opportunity, providing solutions to the salt and pepper populations of Asia that address their needs and stand the test of time is more than one insurer/reinsurer can manage. 
The scale of the challenge is enormous and is worth significant investment from the industry. In my mind, the first purpose of any life reinsurer or insurer is to make society a better place by enabling people to live their best lives, even in the face of adversity. If we succeed in delivering such solutions to the salt and pepper populations in Asia, I feel that we will have gone some way to achieve this purpose. A 
Mr Andrew Gill is managing director, Asia and Australia for Pacific Life Re.

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