Currently showing: Funding longer lives > Longevity risk

12 Mar 14 02:54

We all face some big challenges in our lives. But how we respond to them, and the choices we make, can differ greatly.

One of the biggest risks today is also a blessing. People in Asia Pacific are living longer, healthier and more prosperous lives. Unfortunately this positive trend also means rapidly changing demographics, with numerous implications for our society.

While it is impossible to predict how well-positioned society will be to cope in the future, we know the scale of the challenge will only increase if we do not take action and make adequate preparations.

Smarter, long-term thinking

The recent Global Risks 2014 Report published by the World Economic Forum, with contributions from Swiss Re, took a closer look at these issues. And the solution, according to the report, is to build resilience through collective action and long-term thinking.

This is a sensible way forward, yet when faced with far-off or overwhelming problems, history tells us that too often we do little, or nothing at all.

Procrastination is often one of the biggest challenges to any meaningful progress. And procrastination defines our response to ageing societies: a huge risk that we're aware of, but most people are woefully under-prepared for.

Protection gaps

As part of our 150 Year Anniversary, we asked 22,000 people in 19 markets about the risks that worried them the most. The results of this Global Risk Perception Survey show just how wide the gulf is between our awareness of risks, on one hand, and the actions we take to protect ourselves against those risks, on the other. In other words,
our tendency towards procrastination.

Asked which risks are most likely to materialise within the next 20 years, respondents across all markets were aware of the potential risks from an ageing society. Not surprisingly, Japan stands out with 61% of respondents saying it's "very likely" that the proportion of elderly will become a major financial concern. Yet despite this awareness, Swiss Re's studies reveal a huge protection gap in mortality and health in all major regional markets.

Open minds

The solution is tied to the theme of Swiss Re’s 150 Year Anniversary "Open minds connecting generations". We must challenge perceptions and raise awareness of risks among the wider public. We must debate how we, as an industry, can work together to find some of the answers.

I will participate in just such discussions at the 150 Year Anniversary events throughout the region later this month and am looking forward to exploring – and hopefully sparking answers to – questions about these risks. (See here for details about the events in Beijing, Hong Kong, Sydney, Seoul and Singapore. And even if you're not attending an event, feel free to add your thoughts to the conversation right here on Open Minds.)

Meeting the challenges of an ageing population requires the whole-hearted cooperation of all stakeholders. When we work together, share ideas, and open our minds to what faces today’s communities and future generations, we don't just see risks – we find opportunities. I'm confident insurers in the region are ready for the challenge, but let's act now and not wait any longer.

Category: Funding longer lives: Longevity risk

Location: Asia

1 Comment

Eileen Lim - 13 Mar 2014, 2:38 a.m.

Procrastination is often hard to avoid. After all, no solution exists (yet) that won't upset or disadvantage one group or another. Maybe Confucius and similar proponents filial piety knew more about demographic developments and future economics than we thought!

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