Meeting the needs of an ageing population

Transcription

1 insurance services Meeting the needs of an ageing population Arguably, one of the greatest demographic achievements of this century has been the almost continuous rise in UK life expectancy. Life Expectancy at Birth Born in 1981 Born in 2013 * Males Females Born in 2030 * *forecast Source: This accomplishment is strongly recognised by the House of Lords Select Committee on Public Service and Demographic Change in its recent report entitled Ready for Ageing? In it, the Committee claims that longer lives represents progress and applauds the contribution made to society by our older people. As they say, living for longer is to be celebrated. However, the report also warns that the UK is woefully underprepared for the changes which lie ahead brought about by our ageing population. It sets out a number of key points designed to encourage further debate across Government, with employers, financial services and healthcare providers and those in the housing sector, all with the aim to better help the customers we serve prepare for the risks and costs that living longer presents. The ageing population presents a significant opportunity for the industry and affinity partners in particular with large and diverse customer bases to meet their changing needs with innovative new products and services that deliver peace of mind. 1

2 From pensions, savings and investments, through to insurance and related services based propositions, these UK demographic changes represent one of the most attractive opportunities to find new ways to serve customers, particularly at a time when they are feeling the effects of state austerity and tightening of local authority eligibility. In this article, we look at some of the key trends and ask what this means in terms of the provision of insurance based products and support services. Some key facts about our ageing population: There 3 By 4 One-in-six 5 There 6 In million people in the UK are now over 65 years old [1] are projected to be 51% more people aged 65 and over in England by 2030 compared to 2010 [2] 2030, men aged 65 in the UK will expect to live another 23 years, to 88, and women another 26 years, to 91 [2] of the UK population is currently aged 65 or over, which is the highest seen in any census [3]. By 2050 this will have risen to one-in-four [1] are currently three million people aged more than 80 and this is projected to almost double by 2030 and to reach eight million by 2050 [1] 2008 there were 3.2 people of working age for every person of pensionable age, but this ratio is expected to fall to 2.8 by 2033 [1] 2

3 Britain is woefully underprepared for change During the last century there have been peaks in the birth rate, after both world wars and during the baby boom of the 1960s. The burning issue is the fact the spike of people born after World War 2, now aged in their 60s, will continue into their old age causing a significant increase in those aged in the 80s by These baby boomers will further accelerate the trend as they reach their early 70s at about the same time. It is not surprising that the Select Committee concluded that we are woefully underprepared and issued the hurry-up call for all of us to work together and address the implications of a rapidly ageing population. They warn that without urgent action, this trend could turn into a crisis. The term demographic time-bomb is much used and criticised as being insensitive but if the challenges are not adequately addressed, this is exactly what it could turn into. This trend could turn into a crisis Planning for a much longer retirement One of the key challenges consumers are increasingly facing is their ability to support themselves into retirement and through later life. It is a well held view that the over 50s are considered to be one of the most attractive and lucrative market segments within the UK, particularly as the population age shift continues to take hold and the post-war spike makes its way into the early stages of retirement. This market segment is known for its heavy use of financial services, health and leisure products and services, with a high emphasis on travel both within the UK and overseas. The over 50s sector is also the most affluent of any group by income, with 36% of over 50s having a gross income in excess of 20,000 and by the division of assets, with the Henley Centre (University of Reading) having recently estimated that over 80% of the country s wealth is held by people aged 50 and over. 3

4 However, as the Select Committee points out in its report, people urgently need to review how they are going to pay for the risks and costs associated with lives that may be 10 years longer than previously. Whilst this is no sudden phenomenon, the statement that people can outlive their pensions and savings, suffer ill health and need social care certainly puts the problem into sharper focus. Excellent opportunities for insurance and services-based products to cover the risks of later life Good holistic financial planning is an important aspect of this, particularly as 10.7 million people in Great Britain can currently expect inadequate retirement incomes [2]. This puts more focus on later working, phased retirement, pensions, investments and savings provision and releasing equity from property, but also offers opportunities for insurance and services-based products to cover the risks of later life. The staged introduction of auto-enrolment into workplace pensions from 2012 will go some way towards encouraging more saving towards retirement, but it will not solve the problem and certainly does not make up for years of levelling down from final salary schemes to less generous defined contributions arrangements. As a result, many individuals still need to find alternative ways to plan for retirement and beyond. This planning process goes well beyond financial services and insurance into health and wellbeing, lifestyle and support services, and also extends from the individual across to the wider family and support networks. These challenges provide excellent opportunities for affinity partners, intermediaries and direct providers to help meet the growing private demand for products and services. The increasing pressure on the health and social care system Although many older people want to live an active life to the full and enjoy a long, happy and independent retirement, eventually almost everyone will come to rely on the health and social care system for support. In fact, two-thirds of men and 84% of women currently aged 65 will need some social care before they die [2]. 4

5 The NHS is already facing arguably its greatest ever challenge as it attempts to find more of the 20bn of savings it has been tasked to achieve by 2015 through becoming more efficient, at the same time as bedding down the changes brought about by the Health and Social Act this year; both of which are meant to be achieved without impacting front-line care. Only recently, the King s Fund warned that care could get worse over the coming years and that 2013 could be the turning point [4]. The rapidly ageing population is going to lead to a major increase in demand and costs for healthcare with rising numbers of older people with several long-term chronic conditions. A recent report published by Age UK showed for example that most 85-year-olds have to cope with between three and six long-term conditions. The rapidly ageing population is going to lead to a major increase in demand and costs for healthcare This all comes at a time when NHS budgets are being tightly squeezed due to flat economic growth and the need to rebuild public finances, giving yet more issues for the NHS. The scale of this is illustrated by the influential think-tank, the Nuffield Trust, which has stated that even if the health service manages to achieve the 20 billion of savings, there will still be a 28 billion hole in its finances by 2021/22. The Nuffield Trust went on to warn that a cash-strapped NHS will have no choice but to restrict services and limit care, forcing it into effectively becoming a two-tier service by stealth. When it comes to social care funding, this is also under huge pressure. Demand is increasing and with eligibility thresholds continuing to tighten, as local authorities tackle funding cuts, the position is expected to deteriorate further. Whilst the Dilnot Commission proposals have been broadly welcomed, the scope of the enquiry and subsequent recommendations do not attempt to address the core funding issues. Jeremy Hunt s recent speech in Eastbourne, in which he said that dementia is one of the biggest threats to society, shows just how much pressure the system is under but this also extends into other areas such as domiciliary care and the treatment of other chronic conditions. 5

6 Some of the impacts of an ageing population on the health and social care system: l The treatment and care of people with long-term conditions already accounts for 70% of the total health and social spend in England [2] l Public expenditure on social care and continuing healthcare for older people may have to rise by 12.7bn in real terms by 2022 just to keep pace with expected demographic and cost pressures alone [2] l The incidence of dementia for people aged over 65 is forecast to increase by 80% to 1.96 million from 2010 to 2030 [2] l 25 million people in the UK have a close friend or family member with dementia [5] Customers and their families are feeling the burden According to The Guardian [6] families are increasingly becoming the primary carers, with support from local authorities, the NHS and charities. Apart from the cost implications, this also presents other more personal non-financial challenges as the increasing burden of care brings with it added time pressures and stress. With the House of Lords Select Committee warning that many people will have inadequate pensions and savings provision [2], coupled with the public funding crisis in the health and social care, increasingly it will be down to individuals to ensure they have sufficient financial provision and support to help them through longer lives. FirstAssist has conducted extensive consumer research with YouGov which shows that the over 50s have more concerns and worries when it comes to health. They also feel the burden of both responsibility and the pressure of the cutbacks in the health and social care system. Some of the main health issues perceived by consumers as being the most likely to affect them include domiciliary care, dementia and of course the growing burden of responsibility for their parents and other family members. As one focus group participant told us, I have elderly relatives and want to make sure they remain healthy and happy without them impacting on my lifestyle. 6

7 Opportunities to innovate and grow customer relationships The trend towards an ever ageing population creates many opportunities to meet customers ever changing needs across many different target groups, for example: l Older people who wish to maintain independence in their own homes l Children with elderly parents or relatives l Carers of elderly parents or relatives l People who require post-hospitalisation rehabilitation services Products and services are likely to blend elements of insurance to manage the risks with additional health, wellbeing, lifestyle advice and support services. This will combine preventative support and assistance with risk management, enriching propositions to ensure that customer needs can be met within a flexible package, whether that is to provide domiciliary care, dementia cover or cover for other types of risks. The changing demographics of the UK market, coupled with the ever growing pressures on traditional sources of funding such as pensions, savings and the welfare state are opening-up opportunities to provide new insurance products and supporting services to meet the needs of customers who are increasingly aware of the issues and growingly worried about the impact it has on them and their families. With you all the way FirstAssist has long-standing experience in meeting the needs of older customers, along with the capabilities to help partners extend their health, accident and travel insurance offerings for the older market. These capabilities are extended further under Cigna ownership, with access to a broader range of products and expertise globally. [1] [2] Ready for Ageing? Select Committee on Public Spending and Demographic Change, 14th March 2013 [3] BBC News, 16th July 2012 [4] BBC Health News, 27th September 2012 [5] Alzheimer s Research UK [6] The Guardian, 24th February 2013 To find out more, please contact Jody Baker, Head of Business Development on or us at corporate.info@firstassistinsurance.co.uk 7

8 For over two decades, FirstAssist Insurance Services has been a silent partner in our markets working behind many of the UK s largest brands. We deliver specialist and bespoke white-label insurance solutions which generate many millions of pounds of additional income for our clients each year whilst extending their customer propositions. In that time, we have built an enviable reputation as one of the UK's leading providers of white-label solutions across our core areas of insurance expertise: travel, protection, health, life, accident and legal protection. Driven as a specialist business by an entrepreneurial, commercial management team, we provide a unique range of products and flexible marketing solutions for banks, insurers, affinity organisations, corporations, intermediaries and small and medium-sized enterprises. FirstAssist Insurance Services was acquired by Cigna in November 2011, which further enhances our capabilities with access to a broader range of health, life and accident products and the benefits of Cigna s global expertise and infrastructure. We provide award-winning levels of customer service to nearly three million customers. With over 160 individually tailored schemes through major UK brands, we know one size does not fit all. From the commercial arrangements to the regulatory relationship, from a full service stand-alone product proposition to wholesale risk provision, we will custom-design the perfect solution to meet your customers and business needs. insurance services FirstAssist Insurance Services Limited, Marshall s Court, Marshall s Road, Sutton, Surrey, SM1 4DU Registered in England & Wales No Authorised and Regulated by the Financial Services Authority FirstAssist Insurance Services Ltd is part of Cigna.