A new report from Capgemini urges property and casualty (P&C) insurers to be ready for changing demographics as aging and urbanization are concentrating risk, requiring new underwriting and new pricing models. They also point out that ownership is evolving, pushing insurers towards providing flexible, modular coverage.
“Demographic change is no longer just a concern for life insurance or a distant macrotrend. It’s a strategic, operational and risk management priority for every function in the P&C business,” say authors of the report, Are you ready for an aging population + urbanization? “The aging population acts as a risk amplifier – more dependent on infrastructure, more vulnerable to disruption and more difficult to insure using legacy models. Combined with global urbanization and climate risk, today’s threats no longer exist in isolation. They are interlinked, cascading across property, liability and service lines.”
Reshaping the foundation of risk
The report points out that nearly 70 per cent of the world’s population will live in cities by 2050, “concentrating people and the risks they carry into denser, more complex environments,” they write. “For property insurers, these forces of aging and urbanization are not distant macroeconomic trends, they’re reshaping the foundation of risk, value and demand. What happens when people live longer, own more, crowd into high-risk zones and yet increasingly diverge from traditional models of ownership and behavior?”
They say insurers must respond to three major shifts – the geographic aggregation of risk, concentrated in urban clusters, wealth concentration in aging populations and capacity and pricing challenges. “Carriers must move beyond historical data models and incorporate demographic overlays, predictive analytics and real-time geolocation insights to build pricing that reflects the true complexity of today’s risk profiles.”
They also recommend redesigning for flexibility to reflect transient lifestyles to create products that adapt across life stages, property types and ownership models. They also note that commercial insurance is shifting from tangible assets like factories and warehouses to intangible assets like data and intellectual property. “Risk isn’t disappearing, it’s just changing form,” they write. “Property insurance must evolve from a static, asset-based mindset to a dynamic, experience and service-driven one.”
