Earlier this month, the Association of British Insurers (ABI) presented a report at its bi-annual conference in London. British Insurers are painfully aware of the challenges facing the UK, the ageing population and the economy. The report, entitled “Identifying the Challenges in a Changing World” will certainly cause debate within the industry as to how insurers can assist a poorly prepared population retire with reasonable levels of confidence in a system shaken by the events of 2008.

Some of the critical data presented in the report highlights the delicate nature of today’s retiring community and point to big gaps for retirees as soon as 2020. On the whole, it is safe to say that as a people, residents of the UK are unprepared to meet the financial challenges that previous generations have enjoyed in retirement.

Trends Identified

The report illustrates and identifies the critical changing trends that are affecting the industry, financial planners and retirees. These seven over-arching trends are:

The digital revolution and impact of the social media – The ABI encourages the industry to increase their awareness and presence in these new marketplaces.

Global convergence, with an increasingly inter-connected and balanced global economy – The industry must embrace the global economy in terms of investment and in terms of the competitive nature.

The development and recovery of Western economies after the financial crisis – The ABI cites reasons Western economies will recover faster than emerging economies and why insurers in these economies are better positioned to service individual and corporate clients.

Global ageing – The report includes data regarding global ageing and clearly indicates a trend towards much higher retirement ages.

Political challenges, with a more proactive and visible industry approach to public policy than previously – In order to serve clients better and help prevent a repeat of the financial events of 2008, the industry must be much more proactive and engaged in government policy in the future.

Interventionist regulation – The industry must prepare and support interventionist regulation so as to protect society and the general population.

The continued impact of climate change – Insurers must understand that the science is true and it is time to prepare for climate change and the ensuing changes.

These seven trends will dominate forward thinking insurers for the coming years to come. The industry must be prepared to work with government to meet these challenges.

Statistics in the Report

The July ABI report contained some statistics that should put society, government and the retirement community on alert. Many of these statistics were obtained during 2012 general population polling by the ABI, from polling of insurers and from government statistics. Many of these statistics reveal deep changes in the mindset of the population and can be attributed to the brutal losses in personal savings and general despair caused by the recession.

Employment – Unemployment Sentiment

• 52 percent of the UK population believes government should have primary responsibility for living costs if an individual loses his or her job or if people become unable to work due to illness.

• 80 percent of the population believes government should help subsidise persons who are unable to work due to injury and who will be unable to work in the future.

• 65 percent of participants believe the government should help support persons who are unemployed for more than 30 days.

Financial Capabilities of the Ageing Population

• 51 percent of participants believe their family would be under extreme pressure if they were injured or contacted a serious illness that prevented them from work.

• 57 percent of the population does not have life insurance, critical illness insurance or income protection insurance.

• 66 percent of participants will struggle to pay for long-term care costs.

• 50 percent of participants were unaware of any current state programs for long-term care assistance in old age.

Retirement Statistics

• Only 20 percent of persons polled said they think they will ever be able to retire.

• 41 percent of UK residents who do believe they will retire think they will have to have a part-time job or more to support their retirement.

About Data Protection

• 72 percent of those polled said they had adequate protection of personal data in the online environment.

• 60 percent of those surveyed reported they would be unhappy with their social media network if their personal data was shared with other companies for any purpose.

This data is important. It is particularly important for retirees, future retirees and financial planners. The bottom line is that UK residents expect to live longer and work longer and have little confidence in government participating in meaningful regulations to protect their savings and pensions.

This places weight on insurers and financial planners to provide advice and products that demonstrate lessons learned from the recession.

Clients want to know how they will be protected and they expect reasonable guarantees as well as reasonable returns. It is the industry’s biggest challenge to provide these products for this and future generations.

Learn more about saving for retirement.