Ageing populations and rising mortality main concerns for life insurers and reinsurers

In 5 years, one in four Singaporeans will be over the age of 65.

The rapidly ageing population in Singapore and across Asian markets presents a significant challenge for life insurers and reinsurers.

By 2030, one in four Singaporeans will be over the age of 65, a demographic shift that will dramatically increase the demand for products addressing longevity risks.

This trend is not unique to Singapore; in fact, across Asia, the number of people aged 65 or older is projected to exceed 1.2 billion by 2060.

This demographic transformation poses several concerns for the life insurance industry. Firstly, as populations age, there’s an increased risk of higher mortality rates amongst policyholders.

This could lead to a surge in claims, potentially straining the financial resources of insurers and reinsurers.

Additionally, the cost of healthcare tends to rise exponentially as people get older and sicker, with 25% of all healthcare costs incurred during the final three years of life.

The ageing population also creates a pressing need for specialised insurance products. Many current product offerings do not adequately reflect the needs of the elderly, primarily due to underwriting and profitability challenges.

Insurers must look at developing affordable, simplified private health and protection products tailored to address the unique risks facing the elderly population.

Moreover, the longevity risk – the risk that policyholders will live longer than expected – becomes more pronounced. This could lead to higher-than-anticipated payouts for life annuities and pension products, potentially impacting the long-term solvency of insurers.

However, this demographic shift also presents opportunities. The demand for retirement and health insurance products is expected to grow significantly. In Singapore, for instance, the life insurance market is projected to reach $59.5 billion in gross written premiums by 2029, growing at a compound annual growth rate of 4% between 2025 and 2029.

To address these challenges and capitalise on the opportunities, insurers and reinsurers need to innovate. This includes developing new products like enhanced retirement plans and long-term coverage options, as well as focusing on preventative health education to help consumers manage age-related medical costs.

Reinsurance solutions, such as longevity swaps and quota-share covers, may also help insurers manage the additional capacity needed to meet this growing demand.

Whilst the ageing population presents significant challenges for life insurers and reinsurers in Singapore and Asian markets, it also offers substantial growth opportunities for those who can adapt and innovate to meet the evolving needs of this demographic.