Modern life is changing at what feels like a faster-than-ever pace and just keeping up with trends, never mind getting ahead and forming strategies, is increasingly difficult. But what are the key lifestyle trends that insurers need to be aware of? In this article we concentrate on three areas which we think will have an impact in a variety of ways.
The composition of the household continues to change. While the number of dwellings in England remains relatively stable at 23.4m, the biggest change is in the ownership of those properties. 19% of those properties are rented privately (this figure was consistently around 10% in the 1980’s and 1990’s) and this figure is not likely to decrease given the situation in the property market. Getting onto the property market is harder than ever for younger people, with the average age of a first time buyer now being 33. In 2004/2005, the number of 25-34 year olds renting was 24% - in 2014/15 this had increased to 46%, while over the same period the number buying mortgages decreased from 54% to 34%.
The number of families with dependent children in private rented accommodation is also increasing, from 30% in 2004/2005 to 37% in 2014/2015, or 912,000 more households.
What does all this mean for insurers? The nature of policies required also need to change to reflect the way society lives. With those under 34 starting to see property rental as the ‘norm’ until later in life, contents policies will become more important and given other influencing factors (see connected consumer and below), tailoring these policies to people’s lifestyles will become paramount.
Just like the digital economy before it, the sharing economy is becoming a reality, and fast. The sharing economy is where a number of unconnected people can share a particular resource or asset online to maximise usage at all times.
According to the Financial Times, the sharing economy is growing faster than Facebook, Google and Yahoo combined. PWC estimate that the UK sharing economy will grow from £7bn in transactions in 2015 to £140bn in 2025, split into five main areas – collaborative finance; on-demand professional services; on-demand household services; peer-to-peer transportation and peer-to-peer accommodation.
Take Airbnb for example. The world’s largest accommodation provider with over 50,000 listed properties in the UK alone – owns no property at all. It has a business travel offering as well, used by over 250 companies.
But what happens when there is an accident at an Airbnb-booked property? Host insurance is in its infancy in the UK and what is covered can be complicated.
Traditional insurance products will struggle in this emerging economy, and new digital start-ups are likely to have the edge, unless insurers start to adapt now.
The sharing economy may lead to ownership of expensive (insurable) items reducing, and short term cover becoming increasingly popular across a variety of sectors. This will mean that fast moving, accurate claims handling will be crucial.
The traditional retirement age of 65 is not as steadfast as it used to be. Health improvements on the one hand and financial issues on the other have meant that many people are living and working longer – and this can have serious implications for insurers.
An ageing workforce is almost a given. According to an article on the CBI website, there are 13.5 million expected job vacancies over the next 10 years, but only 7 million young people expected to enter the labour market. Overseas workers will fill some of the gap (though Brexit may have an impact here), but older workers will be needed to fill the rest. Depending on the industry, this may have implications for insurers when assessing risks. Sectors involving physical activity may see an increase in muscular problems or slips and trips for example.
However lifestyles change, one thing is certain – insurers will need to be able to adapt at a quicker pace than ever before.
Don Clarke
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