Longevity is a macro trend which has far reaching implications for products, profitability and most interestingly – the new and required client experiences we need to design for.
When assumptions about life expectancy and mortality rates are inaccurate, financial outcomes are put at risk. Medicine has made some incredible advances, and even minimal changes can increase longevity. An aging population and greater numbers of people reaching retirement age add to longevity risk. Enter the immeasurable value of using a tool like Strategic Foresight, a design modality.
For the uninitiated, Strategic Foresight is a systematic and structured process of exploring multiple possible futures to identify opportunities, anticipate challenges, and build adaptive strategies and solutions.
Unlike traditional strategy in which an outcome is desired and which predicts a single desired future, Strategic Foresight embraces complexity and uncertainty, allowing for the creation of solutions that are relevant, resilient, and innovative in the face of rapid change and potential disruptions.
The dual factors of increasing longevity and falling fertility mean the world is facing a new demographic reality – a growing elderly population with fewer working-age people to support the financial needs of the collective. Alongside family and government, insurance is ranked as one of the top three institutions to help people prepare for longer lives. Insurance solutions that address the intersections of health, wealth, and longevity will become necessary to support Clients effectively as their needs and desires change.
This is a moment where insurers can think deeply using Strategic Foresight methods to start to consider how these new realities might impact their products, services, distribution and their members. The use of Design in innovation is critical to understand deeply what matters to Clients. Strategic Foresight lends a means to start to unpack how these Client needs might change given all the changes around them that are changing their perceptions, position and desires. Only from a solid understanding of what Clients need and want now, and how different futures might alter these desires can insurers start building and iterating with solutions that will be impactful.
Strategic Foresight tools like Horizon Scanning (actively searching for early signals of potential changes in technology, society, economics, and the environment) Trend and Driver Analysis (identifying and analyzing the drivers and trends that could shape future scenarios) and Scenario Planning (developing a range of plausible future narratives to understand different potential futures and their implications) prove extremely valuable.
Drilling in with quantitative data - Canada’s population longevity has significantly increased over the long-term with life expectancy rising for both men and women. Despite a decline in 2020-2022 due to the pandemic, there is a rebound to 82 years. Consider just 60 years ago, in our lifetime men’s life expectancy was 68 years and women’s 74 years. This phenomenon presents both opportunities and challenges for the insurance sector. Most obviously traditional retirement timelines now might extend by many decades.
Increased life expectancy leads to a greater focus on health and wellness as consumers prioritize preventive measures to maintain their quality of life Strategic Foresight differs from traditional strategy as it Focuses on Possibilities, Not Predictions (Foresight doesn't aim to predict a single, definitive future but to explore a spectrum of plausible futures) with a Long-Term Orientation (it shifts the focus from short-term gains to long-term sustainability and resilience). Importantly, it helps Navigate Uncertainty (provides tools and frameworks to navigate complex and unpredictable situations) and finally is Proactive vs. Reactive (it helps move beyond reacting to change to actively shaping and creating the future).
The traditional work model is also undergoing a transformation, largely driven by technological advancements, globalization, and shifting attitudes toward work-life balance across younger generations. Remote work, gig economies, and freelance opportunities are becoming more prevalent, which impacts both the needs of those Clients as well as the right distribution paths to connect with these individuals.
Add to all of this, the sandwich generation, typically defined as individuals who are simultaneously caring for both aging parents and their own children, adds another layer of complexity to the insurance landscape. This demographic often faces unique financial pressures, as they must navigate the costs associated with caring for multiple generations. The insurance needs of the sandwich generation are multifaceted, encompassing health, life, and long-term care insurance and are starting to be felt, and insurers who can traverse alongside their Clients and provide bespoke solutions that meet these new financial needs will drive loyalty and retention.
The interplay of longevity, the changing nature of work, and the sandwich generation is reshaping the insurance industry in profound ways. Design and Strategic Foresight can drive scenario planning, to envision various possible scenarios that increased longevity will create. It can start to imagine flexible solutions that can adapt and allow for modifications over time. It requires empathy and the resulting products and solutions will be more intuitive and accessible to the user. Finally, the practise of Design inserts feedback loops that provide valuable insights leading to innovations that address real challenges.
In this dynamic environment, insurers must remain agile, leveraging technology and data analytics to better understand emerging risks and consumer preferences. Ultimately, Design and tools like Strategic Foresight provide the necessary introspection framework and its proactive approach will ensure that insurers continue to play a vital role in promoting financial security and peace of mind for individuals and families navigating the complexities of modern life. By understanding these intersecting challenges, a broad organizational strategic impetus emerges to start designing simpler, more relevant products that speak to people younger and more consistently.
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This insight was originally published in the first issue of FinScale Magazine by TrialScale. Download the magazine to keep reading.