Capgemini Report: Demographic Shifts to Transform P&C Insurance by 2050
The Capgemini Research Institute's World Property and Casualty (P&C) Insurance Report highlights significant transformative trends in the global P&C insurance industry driven by demographic shifts and evolving consumer behaviors. By 2050, the global dependency ratio is expected to increase from 16% to 26%, indicating a larger senior population relative to the working-age group. This demographic change will influence consumption, transportation, and technology use, impacting both commercial and personal P&C insurance sectors.
The report emphasizes the shift toward a prevention-focused and technology-enabled insurance model, featuring real-time risk monitoring and predictive underwriting. Consumer spending trends show an increase in lifestyle expenditures like travel and home renovations, but a decline in the purchase or upgrade of larger homes. Urbanization and automation further push insurers to reevaluate product offerings and risk assessment.
Auto insurers, for instance, are likely to expand into commercial insurance and shared mobility coverage given reduced driving among seniors and increased reliance on ridesharing. Property insurance must adapt to smaller, multigenerational households with preventive and age-friendly options. Commercial insurance faces evolving risk profiles due to demographic-driven automation and workplace changes.
Climate risks compound the demographic challenges, with nearly the entire global population exposed to drought and excessive rainfall, affecting concentrated urban risk areas. Insurers will need to address these interconnected risks alongside workforce aging in their strategic planning.
Capgemini stresses the vital role of artificial intelligence (AI) in enabling advanced underwriting through predictive insights and real-time intelligence; however, it notes that only a minority of insurers currently have mature capabilities in this area. The report advises P&C insurers to continuously evolve their operating models, enhance risk governance, and adapt to changing client behaviors to remain competitive and resilient.
Overall, the report calls for insurers to analyze portfolio sensitivities related to demographic transitions, optimize service models, and prepare for new market dynamics shaped by automation, urbanization, and climate-related risks. Strategic medium- and long-term planning involving both executives and boards is recommended to future-proof the industry.