The impact of ageing population on life insurance : an EU perspective

Abstract

The aging population is a prevalent demographic trend in recent times, resulting from advancements in healthcare and changing societal norms. This trend has far-reaching implications, including an increased demand for medical treatments, disability support, and life insurance policies among elderly individuals. While numerous studies have explored the societal impacts of an aging population, few have specifically examined its effects on the life insurance sector, particularly within the European Union (EU). This dissertation addresses this research gap by investigating the relationship between aging populations and life insurance in EU countries. The primary problem statement centres on the potential consequences of an aging population for life insurance, including changes in policy uptake, premium rates, and claims. The study hypothesizes that countries with older populations may exhibit distinct patterns in life insurance behaviour, potentially leading to variations in premiums, enrolment rates, and claims. To test this hypothesis, the research formulates three main research questions: (1) Do countries with aging populations perceive life insurance differently than those with younger populations? (2) How do insurance claims and premiums vary in relation to population age, GDP, healthcare expenditure, and total population? (3) Is there a significant correlation between life insurance behaviour and the age of a country's population? A comprehensive review of the literature reveals that the aging population's impact on the life insurance industry is multifaceted. It affects demand for life insurance coverage, prompting adjustments in product offerings and pricing models. Additionally, the study explores the broader social and economic implications of aging populations, including shifts in workforce dynamics and evolving societal attitudes towards older adults. Future trends suggest that technological advancements, behavioural insights, and ethical considerations will shape the industry's response to an aging population. The study employs a mixed-methods approach, combining qualitative data from email interviews with representatives from consultancy companies in Malta with quantitative data obtained from the European Insurance and Occupational Pensions Authority (EIOPA) and other sources. The integration of both data types facilitates a comprehensive analysis of the relationship between aging populations and life insurance behaviour. In the discussion chapter, we explore the data analysis focused on the impact of an ageing population on the life insurance sector in European Union (EU) countries. The analysis incorporates both quantitative and qualitative data. Quantitative data encompassed key variables such as gross premiums written, gross claims made, average age, total population, GDP, and healthcare expenditure. Notable findings included a positive relationship between premiums and claims, underscoring the fundamental principle of insurance. The relatively stable average age across EU countries hinted at an ageing population trend, potentially increasing demand for life insurance. Population size and economic disparities also emerged as factors influencing the insurance landscape. Qualitative insights from consultancy companies in Malta added depth to the local context, shedding light on industry perceptions and challenges. Overall, this comprehensive analysis sets the stage for a nuanced exploration of how demographic, economic, and healthcare factors interact with the life insurance sector in the EU, providing valuable insights for policymakers and industry stakeholders. In summary, this dissertation seeks to enhance our understanding of how aging populations impact the life insurance sector within the EU. Through a rigorous research methodology, it aims to provide insights into the dynamics of life insurance behaviour, premiums, and claims in countries with varying population age profiles, shedding light on the implications for insurers, policymakers, and consumers.