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30 Jul 13 15:54

While mountain biking this morning at 6:15am along "the ridge" single track trail, which is both great for my longevity (cardiovascular exercise) and also a longevity threat (basically scares me to death), one of my best friends, a baby boomer health nut asks me, "what do we really know about longevity?"

I had to think quickly as we were coming up on a particularly treacherous turn and so just barked out a few of the real longevity highlights:

We know that improved longevity is truly a global phenomenon and that people are living longer in Europe, North America and Asia, both in developing and developed countries!

The key source of longevity improvements are medical advances, lifestyle changes, environmental conditions, and technological developments.

We have a huge exposure to longevity risk, the risk that we outlive our savings. In the US and Canada we have over $7 trillion in exposure, with over 95% of this in Defined Benefit pension plans.

The financial impact from even very modest changes in longevity is dramatic.

If a 70-year-old male, who is expected to die at 86, has an improvement in mortality of just one year to age 87, his nest egg needs to increase by 4%!

We really aren't taking about science fiction here, just one more year of life expectancy.

Clearly holders of longevity risk, like pension plans, and annuity writers, are taking notice, and are investigating solutions like longevity insurance, that allow them to transfer longevity risk to reinsurers like Swiss Re.

Longevity is a long term business, and being a part of a company with such a remarkable 150 year history makes Swiss Re a very credible longevity partner.

So what we know is longevity risk is real, large, with material financial impact, and there are practical solutions for holders of this risk to transfer it.

Wooooaaah!! Where did that tree come from? Better focus on the mountain biking…


Category: Funding longer lives: Health/medicine, Long-term care, Pension/retirement


4 Comments

Gavin Montgomery - 2 Aug 2013, 2:52 p.m.

There was a modestly interesting article in the British Medical Journal last month by Ben Goldacre, the author of the badscience.net blog, and David Spiegelhalter, the Winton Professor of the Public Understanding of Risk at Cambridge University, examining the benefits of laws to enforce the use of bicycle helmets: http://www.bmj.com/content/346/bmj.f3817?ijkey=I5vHBog6FhaaLzX&keytype=ref

One of the buried conclusions is that while helmets may save lives mandating them can also discourages bicycle useage, so there is a net mortality loss: apparently, cycling is really healthy and helps people live longer and more productive lives while crash helmets have a relatively small mortality benefit.

That left me with two take-aways, the first being that mortality gains in the past decade have as much to do with a shift in attitudes towards personal health as they do in breakthroughs in medicine. In retrospect, Jane Fonda probably deserves a Nobel Prize for her contribution to publich health. The second is that efforts to legislate for public health usually fall foul of the law of unintended consequences. For example, I would guess that Mayor Bloomberg's scheme to limit the size of soda cups actually boosted drink sales and the law's failure in the courts has now set a precedent which will almost certainly restrict future efforts to legislate healthy consumption and food marketing: http://www.deseretnews.com/article/865583916/Bloomberg7s-16-ounce-soda-defeat-a-lesson-in-governance.html?pg=all

Gavin Montgomery - 2 Aug 2013, 2:55 p.m.

Talking of Spiegelhalter, he's the brains behind this BBC video on how to maximize your chances of living to 100: http://www.youtube.com/watch?v=vApS8EkopTI

Alicia Montoya - 2 Aug 2013, 6:38 p.m.

@George: Interesting thought. Has anybody tried to put a figure to the global longevity risk? I think few people see the consequences of these changes on a macro scale, and even fewer understand the role that insurers and reinsurers play in providing cover for these big risks.

@Gavin: Fantastic video! Simply put with each risk quantified as minutes gained or lost in a day! However, as Bernd discusses in this post https://openminds.swissre.com/story/377/the-silent-disaster, just because we know about the risks doesn't mean we actually change our behavior to avoid it. In fact, we seem to be great at justifying our (often unhealthy or unsustainable) choices.

What do you think can help curb people's behavior? From where I stand, it seems like many people only react to financial incentives. So how do we make it cheaper to be healthier / sustainable?

George Graziani - 2 Aug 2013, 8:31 p.m.

Gavin - Thanks for the comment. Great Video !
On the bike helmets ... the correct answer is ... yes wear a helmet. In fact I would wear two if I could.
Now for something really innovative, check out the invisible helmet http://www.youtube.com/watch?v=CMAhptqk-4Q (be sure to watch to the end)
I absolutely agree that changing behavior is a huge part of longevity. Adding one pound a year from age 20 to age 40 is much easier than losing 20 pounds at age 40. In my view habits and patterns are unavoidable in a life, the key is to try to develop healthy ones, or at least counterbalance the bad with the good. Much like the video you posted.

On the regs around soft drinks in NYC , to me it is as much about language as anything else. "Small " in a NYC movie theater is the equivalent of a "Super Giant Mega Large" in Canada. Gotta love NY even the language is leveraged.

Alicia - Thanks for the comment. The global longevity exposure is well over $20 Trillion ( you can get there by adding up the publicly disclosed assets of defined benefit pension plans).


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