Asia-Pacific 20 to 40 year olds become more risk averse. Medical bills and longevity risk fuel needs for insurance and financial planning

28 July 2011, Hong Kong

A study reveals that:

  • Asia Pacific’s Generation X and Y of 20 to 40 year olds have become slightly less willing to take risks over the past two years.
  • They have strong needs for insurance and financial planning, fuelled by worry about medical expenses and the risk of living longer.
  • Perceived cost is a barrier to buying insurance; whereas life insurance is in general quite affordable and within the price they are willing to pay.
  • For the Asia-Pacific insurance industry, the 20 to 40 year olds are not only the future buyers of insurance, but also represent tremendous business opportunities now.

Swiss Re commissioned a large scale survey covering 13,800 consumers aged 20 to 40 across major cities of 11 Asia-Pacific markets between April and May 2011.

The survey aims to identify any changes in consumer risk attitudes as compared to the results of the inaugural study conducted during the Global Financial Crisis in 2009, by using the Swiss Re Consumer Appetite for Risk Index (CAFRI). The survey scope has been extended in 2011 to look into the insurance needs and buying behaviours of respondents.

Growing conservatism in Asia-Pacific

Across the region, the 20 to 40 year olds have become slightly less willing to take risks over the past two years, as indicated by the drops in CAFRI values (Figure 1).

Despite the Tohoku earthquake on 11 March, Japan has become the most risk taking market, followed by Hong Kong and Australia.

Clarence Wong, Swiss Re’s Chief Economist Asia, says: “Respondents from developed markets tend to be more willing than their emerging market peers to take risks, given the availability of better social security systems.”

Worry about medical bills fuels insurance needs

The study shows that around 40% of respondents across the region say their families would or might struggle financially in case of early death, major serious illness or disability, and a key reason is inadequate insurance.

Less than half (47%) of respondents say they have enough medical and health insurance (including their own, government and employers) to cover for their medical expenses.

A high majority (67%) of respondents are concerned about the amount they have to pay out of their pockets for medical expenses relating to major illness. And about 60% are concerned that their medical/health insurance premium will increase beyond their affordability in the future.

Wong says: “Given the significant protection need, a large bulk of 63% of respondents are planning to buy life/health insurance products in the next 12 months. The proportion is particularly high for emerging markets, highlighting the tremendous catch-up potential.”

“The two most important reasons for buying insurance are: getting a serious illness and the inability to pay for long-term medical expenses,” adds Wong.

Life insurance is affordable

This study also shows that life insurance is in general not as expensive as people may perceive, and is indeed quite affordable across the region.

Asked what would stop them buying insurance, over 40% of respondents say price is an issue. But over half are willing to pay at or above the market price range for a specified term life insurance cover. This proportion is especially high in India (81%), Indonesia (75%) and Singapore (76%).

Wong says: “More education is needed to ensure consumers understand the value of protection insurance against the price they pay.” 

Longevity risk - a call to action

The study also finds that a large majority of respondents across the region (78%) are concerned about their financial future, but only about half have clear financial plans to follow through. This action gap remains almost unchanged even after the Global Financial Crisis. Japan and South Korea have the lowest proportions of respondents with financial plans in place (16% and 25% respectively).

In addition, in over half of the markets surveyed, respondents tend to underestimate their life expectancy – quite significantly by 15 years in Malaysia, 9 years in Japan, and 7 years in both Singapore and Hong Kong, when comparing their self-perceived average life expectancy to the official average life expectancy.

“This perception gap should ring an alarm bell, as underestimating life expectancy can be a risk in the sense that people may not plan sufficiently to meet their financial needs after retirement,” says Wong. “Both the public and private sectors must act together to ensure that living longer remains a benefit to society, rather than a financial burden. In particular, the insurance industry can play a key role in raising public awareness of longevity risks and the importance of personal financial planning at early age, as well as in offering suitable products and services for tackling the challenge.” 

Figure 1: CAFRI ranking and index values in 2011


Note: The higher the index value, the more willing consumers are to take risks, and vice versa. 

Notes to editors

About the survey

The “Swiss Re Survey of Risk Appetite and Insurance: Asia-Pacific 2011” was conducted in April and May 2011, covering 13,800 consumers aged 20 to 40 years old across major cities of 11 Asia-Pacific developed markets (Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan) and emerging markets (China, India, Indonesia, Malaysia and Vietnam).

This target consumer group accounts for about one-third of the population of sample markets or around one billion prospective consumers.

The full survey report is available to journalists on request (

The Swiss Re Consumer Appetite for Risk Index (CAFRI) reflects the overall level of risk appetite of a certain population by consolidating their risk attitudes in relation to four risk aspects: health, finance, career and lifestyle. The CAFRI has a defined range from 0 to 100. The higher the index value, the more willing consumers are to take risks, and vice versa. A value of 50 implies risk neutrality.

About Swiss Re Ltd
Effective 20 May 2011, Swiss Re Ltd became the holding company of the Swiss Re group of companies. 

About Swiss Reinsurance Company Ltd
Swiss Re is a leading and highly diversified global reinsurer. The company operates through offices in more than 20 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Re is rated “A+“ by Standard & Poor’s, “A1” by Moody’s and “A” by A.M. Best.

Swiss Re has been associated with Asia since 1913 and now has about 1,000 staff in Asia-Pacific. The company's Asia headquarters is in Hong Kong.