Aging Population to Reshape P&C Insurance by 2050, Capgemini Report Finds

The Capgemini Research Institute's World Property and Casualty Insurance Report projects significant impacts on the P&C insurance industry due to the aging global population by 2050. The global dependency ratio is expected to rise from 16% in 2024 to 26% by 2050, influencing consumer behavior and insurance product demands. Older consumers will prioritize spending on experiences and home improvements, prompting insurers to develop more flexible, lifestyle-driven coverage options. Auto insurers will likely see a shift toward shared mobility and commercial coverage as older adults drive less and rely more on ridesharing.

The report highlights demographic trends compelling insurers to adapt underwriting models to address evolving risk profiles influenced by a shrinking workforce and increased automation. Commercial and personal insurance lines will require customization to reflect these changes. There is an increased call for leveraging AI and predictive analytics to enhance underwriting accuracy, risk management, and customer experience across the industry.

Climate change adds a complex layer of risk, with projections indicating that by 2050 nearly the entire global population will face drought risks, and 80% will confront excessive rainfall risks. These environmental pressures, coupled with urbanization, will create interconnected risks requiring insurers to integrate climate risk data into their underwriting processes.

Despite 88% of insurers recognizing the critical role of advanced underwriting technologies, only 17% have implemented mature systems. The report encourages a transformational shift toward data-driven operations to achieve greater efficiency and competitiveness. Strategic investment in AI, automation, and predictive capabilities is viewed as vital for managing future market complexities effectively.

Overall, the report advises insurers to recalibrate their service models to meet the distinct needs of an aging population, adapt to shifting risk landscapes, and capitalize on technological advancements. These measures are essential for insurers aiming to sustain profitability and relevance amid demographic shifts and accelerating environmental challenges.