Solutions for an ageing society
The fourth in the series, this year's Next Generation Insurance Customer considered solutions for an ageing society.
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The conference asked four key questions: (1) How will we fund an increasing number of elderly in their upkeep, their health and their care if and when needed? (2) What changes can we expect to see in mortality and morbidity trends in older age? (3) How will our relationship with technology affect how we care and support those in older age? And (4) how can insurance continue to develop products and services for elderly consumers? The answers we got were revealing and thought provoking.
HIGHLIGHTS FROM OUR KEYNOTE SPEAKERS
The needs of an ageing population
CEO, Age UK & Age International
The ability to live longer is, in one sense, one of the great human achievements. However, it comes at a cost. One of those costs is that the elderly will form an increasingly large proportion of the population in most countries; and must to some degree be supported. The other cost is that life expectancy is outpacing healthy life expectancy. We might be living longer, but with a growing range of incapacities and illnesses.
This presents a variety of challenges for society. The first is that the elderly must support themselves at a time when state pensions are decreasing and private pensions are increasingly structured around defined contribution schemes, the ultimate success of which are unproven. This creates a range of political problems. The second challenge is that the elderly need more healthcare. The average health spend required for an 85 year old is around 8 times that of a 25 year old in the UK. A third challenge is that increasing numbers of elderly will need social care, an increase of 25% expected in the UK between 2015 and 2025.
Insurance would be one potential solution to these funding pressures; however, insurance is more effective for near-term dangers, and individuals place a steep discounting rate on risks many decades into the future. Others see solutions in terms of robotics and digital interfaces. However, although there are some elderly heavily active on digital technology, a disproportionate number relative to the overall population are not. Robots may appear equally alien to many elderly users, who may have legitimate concerns around privacy and surveillance.
Ageing: a challenging opportunity
Head Life & Health R & D Europe, Swiss Re
Head of Ageing, Swiss Re
We have three universal wants from our old age. We all want to have sufficient funds to live securely; we all want to have solutions in place to live well, including care should we need it; and we all want to bequeath something, be it to family members or elsewhere.
All these desires need to be funded. Ageing needs are met by a wallet containing individual savings, society support and insurance solutions. In the 'Who pays for ageing?' study, Swiss Re demonstrates the state is the major provider of support, from 71% of total in Germany to 58% in the UK. Other sources of income are savings/pensions and family – with insurance products providing an average of just 5% of funds in surveyed markets.
Swiss Re undertook to better understanding the drivers behind preparing for age. Based on almost 10,000 surveys from nine countries, Swiss Re was able to categorise consumers into one of four classes, based on a consumer's vision for retirement and his or her approach to providing for it.
Those four classes of ageing consumer in full:
- The owl – the planner. She likes to stay in her established environment and strives to upgrade it. She enjoys her lifetime achievements, wants to continue being control and self-sufficient, and wants access to all types of information. In terms of financial services, the owl values reliability of product and certainty of being protected.
- The eagle – the entrepreneur. She wants to continue enjoying a high quality of life, explore the world and seek new experiences. She wants to remain active when retired, and create value for society. She would like to delegate time-consuming and complex tasks and fears trusting the wrong consultant/sales person.
- The ostrich – the recipient. She looks forward to free time, but is not very aspirational. She prefers hobbies and would rather travel to known destinations. She wants to avoid change, is particularly wary of alterations to the state pension, and fears for the younger generation and poverty in old age.
- The toucan – the explorer. She lives in the moment, doesn't think too much about ages, and when she does, old age is the new youth, and young is young at heart. She is optimistic and idealistic about the future. Growing older without financial plans is a valid option. She is positive about new challenges and meeting new people
These four personality types will exert themselves through the prism of societal change. Families have traditionally provided a basis of care; but that is less certain where there is more geographic and relationship distance between older and younger family members. In the absence of close family, care structures are of increasing importance, although there is a reluctance to discuss or consider the need for care. Around both of these is the desire on the part of the elderly to leave some sort of financial legacy.
The call to action for insurers amidst these societal pressures and personality types is to prove their relevance. Insurers can be an important part of finding solutions to care and funding in older age. One of the greatest challenges facing society today can also be a great opportunity.
Empower elderly to live in their own homes for longer
Managing Director, Canary Care
Canary aims to help older people live independently at home for longer. It does this through four targets – to function as an early warning, to be preventative, to be objective in its analysis and to be affordable. Canary deploys sensors within an elderly person's house, but not cameras, microphones or other intrusive devices. Motion sensors are placed by doorways and in the bathroom, registering any sudden movements or lack of movement than might typically be expected on any given day.
Incidents of motion are captured in the company's proprietary software platform to provide care givers with full oversight of activity. If there is some reason that the pattern of expected movement is not complied with, a text alert is sent to the carer. The sensors can further monitor sleep patterns and the temperature in the living accommodation, so that the care giver can intervene if necessary. A swipe card system can be installed to check that support and professional care workers have visited as expected; and that the older person has maintained some sort of social contact.
In an age where we are confronted by a rapidly increasing elderly population, Canary can be a valuable tool in helping older people stay longer in their homes. Residential care and its costs can be postponed, possibly indefinitely, and hospital stays can be reduced or avoided. For insurers, such care systems can reduce costs, reduce health interventions, and help mitigate risks through data.
Prevention strategies for Alzheimer's disease and other late-life dementias
Professor of Neurology
In 1950 the global population of over 80s stood at around 14 million. A century later, that figure is expected to stand at 380 million. Of that population, around 80 million will have some level of dementia, up from 36 million today. The costs of care will be considerable. In 2014, over USD800 billion was spent globally on dementia care, a figure expected to rise to above USD1 trillion in 2018. Directly and indirectly, the societal costs of dementia are higher than the combined costs of cancer, stroke and heart disease.
Despite the scale of Alzheimer's disease, very little is being invested into therapeutics. Investment is too risky for large pharmaceutical companies; and typically, by the time Alzheimer's is apparent, it is too late – there is not enough healthy tissue to treat. Effective therapeutics are needed earlier in the progression of the disease, at which point the symptoms may not be apparent. Nonetheless, progress is being made in understanding the complex pathways to developing dementia, so that a new diagnostic criteria has been developed in the US based on specific biomarkers. We also know that there is a genetic marker which signals a greater susceptibility to dementia, APOE 4, present in around 22-23% of the general population.
Moreover, it is widely acknowledged that there are seven modifiable risk factors affecting dementia – diabetes, mid-life hypertension and obesity, physical inactivity, depression, smoking and low education. Of those seven, six are relevant to other chronic conditions, such as cancer. Around a third of Alzheimer's conditions might be attributable to modifiable risk factors. The positive news is that better understanding of modifiable risk factors is bringing the incidence of dementia down, particularly in men; however, in absolute terms, driven by demographics, dementia cases continue to increase rapidly.
Agencies and private companies are active across Europe in seeking to better manage dementia. The European Institute of Innovation and Technology launched its EIT Health initiative in 2015. EIT Health promotes entrepreneurship and develops innovations in healthy living and active ageing, making healthy lives a reality for all. Elderly care giving is a massive and increasingly unmet need of the 21st century.
Human longevity: Latest insights
Head R&D Life&Health, Swiss Re
The long term longevity trend for the human population as a whole is rising, fuelled by falls in the death rate and an increase in life expectancy over the last century. Much of these gains were driven by improvements in sanitation, in the preparation of food, and in reducing infant and maternal mortality; as well as effective action against infectious diseases. Future gains in longevity will be driven by mortality improvements in the later years of life.
However, improvements are not linear. In 2015, life expectancy in the US fell by 0.1 year. This was a symbolic shock for demographers. Potential drivers include obesity, ageing and drugs misuse. Mortality in England and Wales was reversed in 2011, with a sharp increase of deaths in 2015.
The vehicles for mortality improvements will be behavioural change and bio-medical technology. In terms of behavioural change, the main influencing technology will be the internet of things, and the ability of individuals to monitor their activity, sleep and health indicators. On the medical side, the technology most likely to encourage change is next generation genomics. The cost of sequencing the genome is falling exponentially, allowing for scanning of known genetic disease markers.
Liquid biopsies are new molecular blood tests designed to screen blood for circulating cancer cells. This allows for a quicker and less invasive indication of cancer than a traditional tissue biopsy (not necessarily a 100% diagnosis, but a very strong indicator). Liquid biopsies should aid personal cancer therapy and should improve cancer survival rates. Currently it is approved for one form of cancer, but that is likely to grow. Cellular biomarkers are all in the blood. If there is a takeaway from insurers from these findings, it is that they need to proactively update their Critical Illness definitions to manage claims from exposure to new diagnostic tools, such as liquid biopsy.
Summary of the Swiss Re Institute's Next Generation Insurance Customer event in June 2017. Summary by Simon Woodward.