Seth Rachlin is helping Capgemini and Efma promote a report that contains an important idea: The people of the world are much less likely to think they are well-protected against longevity risk than against health cost risk, or against climate-change risk.
Capgemini is a consulting firm, and Efma is a Paris-based group for banks and insurers.
Capgemini surveyed about 8,000 personal lines and commercial lines insurance customers in 20 countries. It asked consumers to rate their exposure to six types of emerging risk, and whether they had comprehensive protection against that risk.
(Related: Predicting the Future of Insurance)
Capgemini and Efma teams than analyzed the results for their World Insurance Report 2019.
The Survey Results
The percentages of individual coverage customers who classified themselves as having moderate to high levels of exposure to the six risks ranged from 69%, for risks related to climate change, up to 88%, for risks related to increase health care costs.
The “risk of outliving savings/financial insecurity old age” ranked third, and near the top, with 84% of the participants saying they had at least a moderate level of exposure to that risk.
The percentage of participants who said they had comprehensive protection against the six risks ranged from 3.3%, for cyberattacks, up to 13%, for risks related to climate change.
The percentage who said they had good protection against longevity risk was just 5%, or second from the bottom. The percentage who said they had good protection against increasing health care costs, and the percentage who said they had good protection against new medical concerns, was about 11%.
In other words: The survey participants themselves less than half as likely to think they had good protection against longevity risk than against health risk, or against climate-change risk.
What Seth Rachlin Said
Rachlin is an executive vice president and chief innovation of insurance at Capgemini.
Here are three things Rachlin said about about the longevity protection gap.
1. He believes that most life and annuity issuers still want to be life and annuity issuers.
Many life and annuity issuers seem to avoid using words such as “insurance” in their marketing materials. Some parent companies have sold or spun off major individual life and annuity operations.
Rachlin said that he sees companies that want to get out of life and annuity operations, and routine customer service, but that most are still interested in producing, manufacturing and distributing life and annuity products.
2. Life and annuity executives tend to have different interests than property-casualty executives.
P&C executives tend to be more interested in delighting the customer, Rachlin said.
In the life and annuity sector, conversations tend to focus more on finding a market, Rachlin said.
He said life and annuity executives are also talking about the effects of old legacy products and systems on their ability to innovate.
3. Slow product development and approval processes hurt.
In the life and annuity sector, simply adding a rider can take 18 months, Rachlin said.
“And you have no idea when you do whether anyone will actually buy it,” Rachlin said.
A copy of the World Insurance Report 2019 is available here.
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