Demographic Profiles in Insurance – Thematic Research

The insurance industry has long had to adapt to changing demographic environments; in many instances, these are longer term trends allowing the industry time to gradually adapt. However, the continued and rapid development of technology, both in insurance and wider society, has created new nuances specific to demographic factors that were previously undetected. Providers must respond in order to ensure they are meeting the demands of a rapidly evolving and subtly different client base.

Changes in demographics will fundamentally shift the types of consumers that insurers need to target, as well as the types of products they need to provide. An aging population will put increased strain on state pensions and social services like public healthcare. A declining middle class due to median incomes not increasing as fast as other core goods and services means young people are buying a house, getting married, and starting families at later points in life. And a larger proportion of the population living in urban areas leads to increased health risk due to pollution, poor hygiene, and other urban lifestyle factors.

What are the market dynamics of demographics in insurance?

The critical success factor that can be there regarding demographic trends in insurance includes:

Hybrid approach to distribution

With many industries looking to serve consumers through entirely digital mediums, many feel the insurance industry should also adopt this approach. However, across all age groups and most regions, almost one in three consumers prefers to purchase policies face to face. In order to maximize the uptake and attract a wider demographic, insurers should adopt a hybrid approach to distribution unless they wish to become a more specialized provider. 

Regional opportunities

The uptake of insurance products varies considerably across regions. The Nordic market is one that has extremely high uptake when compared to others, limiting the opportunities for new business. However, the Middle East and Africa regions have comparatively lower uptake of insurance.

New partnership opportunities

The sale of mortgage products creates an opportunity for insurers to sell protection policies. Traditionally, this is an opportunity for partnerships with established financial services providers. However, the younger demographic are less inclined to use incumbents for mortgages, creating opportunities for new partnerships with non-traditional mortgage providers.

What are the key challenges faced by the insurance industry in catering to new customers?

The demographic changes that are occurring will ultimately alter the types of consumers that the insurance industry is looking to target. A few of the global hurdle that industry needs to overcome to cater to new customers.

An aging global population

The global population has undergone and is continuing to go through some unprecedented changes in its composition. These changes will have a direct impact on the economy as well as the insurance industry. As governments look to combat increased pressure on social care, the insurance industry may have an opportunity to pick up the slack.

Generation rent

Globally, property prices have continued to outpace the increase in consumers’ incomes, leaving many unable to meet the financial requirements in terms of deposits to get onto the property ladder. This has resulted in many individuals entering the rental market and as a result not engaging with the insurance industry on multiple fronts, as is typically the case when taking out a mortgage.

Declining middle class

The declining middle class is a wider impact of household incomes not increasing in line with other goods and services. The increasing pressure on day to day expenses has resulted in declining uptake of insurance in the lower income bands.

Increasing digital consumers

Consumers are becoming increasingly reliant on digital means to purchase and research goods and services in their day to day lives. The insurance industry needs to ensure that the purchasing journey can be undertaken seamlessly through digital platforms, or else they will be faced with consumers whose expectations they are unable to meet from the get-go.

Who are the key players in the demographic theme of insurance market?

Ping An Insurance, Swiss Re, Root Insurance, AON, Metromile, By Miles, and AXA are some of the key players within demographic theme of the insurance market. The largest insurers typically score well against the demographic theme, as many offer a variety of products designed and distributed to target specific demographics.

Demographic theme in insurance, by key players

To know more about key players, download a free report sample

Market report scope

Scope

• Renters are much less likely to hold some form of home insurance compared to mortgagors.
• Private healthcare will become more popular as an aging population stretches public resources.
• Stagnant middle-class incomes will reduce uptake of insurance policies.

Reasons to Buy

• Identify changes to customer profiles over the next 30 years.
• Be prepared for changing consumer needs when purchasing insurance.
• Plan for the future to stay ahead of the competition.