Insuring an ageing population

senior couple on beach
Just a number

The world's population is getting older, creating challenges for travel and health insurers who must find solutions to insuring an ageing, but still adventurous, population of travellers. Robin Gauldie finds out how these challenges are being overcome

In most developed countries, people can expect to live to over 80 years of age. In China, life expectancy has almost doubled in two generations, to around 76 years. In Japan, the population has an average life expectancy of almost 84. As a result, more people are not only living longer, but are going on travelling until later in life. And this cohort of older travellers is not always content, as previous generations might have been, to stay in the undemanding comfort zone of an escorted tour or cruise. Many are travelling independently, to off-beat destinations, and seeking new experiences and strenuous activities that can range from winter sports to mountain trekking, scuba diving and more.

At the same time, older travellers inevitably accumulate age-related and other pre-existing medical conditions that may cause travel insurers to regard them as a riskier proposition. Not only are they, with age, more likely to require medical assistance, that assistance may well cost more than treatment for a younger insured. Furthermore, older travellers are more at risk of trauma-related death and are more likely to be targeted for muggings, purse-snatching and pickpocketing.

So what are the considerations for insurers and insureds, and is competition in the marketplace acting to provide insurance products with higher or no age limits and medical screening to ensure older travellers are adequately covered, but at an affordable price that will not deter them from taking out an appropriate policy? Just what is the risk appetite of insurers when it comes to covering older travellers?

A specialist market
Research carried out by the travel guidebook publisher Rough Guides shows that many older travellers are more adventurous in terms of where they want to go than they were in their youth, and can afford to travel further and more frequently. “Seniors are certainly going to more remote and exotic destinations,” said Jill Cappelli, East Coast Sales Director, Individual Products, at GeoBlue, a US travel health insurer. “According to the US Census Bureau, the number of Americans aged 65 and older is projected to nearly double from 52 million in 2018 to 95 million by 2060, and the 65-and-older age group's share of the total population will rise from 16 per cent to 23 per cent.”

By 2025, seniors should account for 13 per cent of international travel, up from 10 per cent in 2016

Senior couple on jet ski

By 2025, seniors should account for 13 per cent of international travel, up from 10 per cent in 2016, and more seniors will be travelling than ever before, Cappelli says, citing UN statistics. “Given these dynamics, it makes sense that insurers are targeting and tailoring products for this market. Thanks to our ability to offer travel plans with affordable premiums and medical limits of up to $1 million, the senior market is a strong demographic for GeoBlue.”

Insurers in the UK also say they are more than aware that the baby boomer generation is not just content with golfing holidays and cruises, and the policies of some certainly reflect that. Chris Rolland, CEO of AllClear, a British specialist medical travel insurance provider, stated: “Generally, insurers treat winter sports as an added extra and age limits may apply. However, our branded policies cover a number of other sporting activities as standard with no specific age exclusions.” In addition, the company offers older travellers cover for a variety of activities not specifically listed in policies. “We've been very happy to provide requests [from older clients] for some truly extreme sports, from glacier walking to storm chasing, dog sledding and ice fishing,” Rolland told ITIJ, adding that his company has found that most of its customers were unaware of the range of activities for which they were insured.

Given these dynamics, it makes sense that insurers are targeting and tailoring products for this market

“For example, 89 per cent of our customers did not realise that an 85-year-old would be covered for jet skiing and wind-surfing,” said Rolland. Furthermore, most didn't realise that they would be covered for more sedate activities such as shooting and hot air ballooning, which are all included as standard on the company’s policies.

Another UK-based insurer, Staysure, which specialises in providing insurance for over-50s, agrees that older travellers are a growing market. “Approximately 25 per cent of the UK’s population will be over 65 in 2020,” said Julian Kearney, the company’s CEO. He stresses the need for older travellers to seek a policy that offers medical screening and warns that many are unwittingly relying on policies that do not offer adequate medical cover. 

“As part of our recent Don’t Bank On It industry report, we revealed that 3.3 million British holidaymakers over the age of 50 are unknowingly travelling abroad without adequate travel insurance when opting to rely on travel insurance offered by their banks,” said Kearney. “This is because they do not offer medical screening to tailor a policy to the customer’s needs and often have age restrictions in place.

“The insurance risk becomes greater the older you are, but this is mainly due to people developing medical conditions in later life. [We] work to provide affordable cover for our customers by partnering with underwriters that understand the market and can price pre-existing medical conditions correctly. Living with a managed medical condition or just simply getting older shouldn’t stop you from enjoying holidays and seeing the world.”

Many insurers can provide policies for older travellers, but not all cater properly for their specific needs, adds Kearney. “A one-size-fits-all product is not suitable when you’re getting older, especially if you have pre-existing medical conditions,” he said. “Consumers need to be aware that it’s not just about the cover and the price. A specialist will have the right people and services in place should a customer need their assistance in an emergency abroad.”

Senior woman at airport

Kearney went on to say that although older customers are less likely than young travellers to indulge in risky behaviour, they are very conscious of the need for comprehensive travel cover: “Our policies are here to protect them from a range of mishaps such as flight delays, lost baggage and curtailment. However, with the majority of our customers, we find medical emergency cover is what they look for first.” Around 30 per cent of claims dealt with by Staysure last year were for medical emergencies, with an average cost of £8,104, noted Kearney.

“Seniors are much more aware of the need for travel medical coverage than younger travellers,” agreed GeoBlue's Jill Cappelli. “That said, many seniors actively defy the stereotypes associated with the older generation. It's not uncommon to see seniors climbing Macchu Pichu at age 80 or skydiving at 82. Seniors are testing the boundaries as much as their younger counterparts.”

Help where it’s needed
While older travellers in some markets may be relatively well served by insurance providers – specialist or otherwise – coverage in other markets is patchy, according to some insurance industry voices. “Markets in Europe and around the world (other than the UK and English-speaking markets) still provide very little in the way of cover to consumers with pre-existing medical conditions, where individuals are very poorly served,” said Simon Powell, Founder and CEO of Fit 2 Trip Limited.

“Most EU countries do not offer (such) cover. There is very little medical screening. For example, Fit 2 Trip is the only provider in Spain to offer a medically screened product in the Spanish language. Some countries – Germany is a good example – simply cover everyone; however, they are in a minority. Nordic and southern European countries either provide no cover or limit the types of conditions they will cover to the very basic ones or define pre-existing conditions by the number of months the insured has been 'symptom free'. There is no technical underwriting solution (like screening) used in these cases,” Powell said.

“Other than insurers being more aware of degenerative diseases such as osteoarthritis, which limit the ability to offer longer-term products such as annual policies, insurers in the UK continue to evolve their offers to health impaired travellers,” he added.

As reported by ITIJ last year, the UK's Financial Conduct Authority (FCA) has expressed concern, however, that people with pre-existing medical conditions feel poorly served by travel insurance. “The recent FCA review on travel insurance for consumers with pre-existing conditions highlighted the need for still further signposting to alternative providers, when consumers struggle to get cover,” commented Powell.

According to the UK's Chartered Insurance Institute, the number of Britons living with at least one long-term health condition is expected to rise to 18 million over the next decade. Launching a consultation on proposals to create better access to travel insurance for consumers with pre-existing medical conditions in July 2019, FCA Executive Director of Strategy and Competition Christopher Woolard said the FCA estimates that up to 14.1 million British consumers with a pre-existing medical condition seek to buy travel insurance each year. While only 0.7 per cent of these were denied cover, 11 per cent purchased a policy with an exclusion for their condition.      

The FCA is mooting a new 'signposting' rule to point those with more serious pre-existing medical conditions, including older travellers, toward travel insurers with the risk appetite and capability to cover them. Firms would be required to signpost travellers when cover is declined or cancelled mid-term due to a pre-existing medical condition, when cover is offered with an exclusion for a pre-existing medical condition that cannot be removed, or where a consumer is offered cover with an additional loading to their base programme due to a pre-existing medical condition.  

Senior hands

“The changes will be an important step in helping people to navigate the market more easily and also in reducing the number of customers who are over-paying significantly for travel insurance,” said Woolard.
The Chartered Insurance Institute has also suggested that longer-term policies might benefit consumers who have no health issues when they buy, even though their circumstances might change during the life of the policy.   

factors such as the growth of this demographic and improved medical and financial wellbeing may change the age/cost response curve over time

Adapting to this growth market
Perhaps surprisingly, older travellers in the UK appear to make only slightly more claims for illness or injury than the national average, according to a recent survey carried out for AllClear. The survey found that 26 per cent of Britons cited an accident or fall as the most common reason for requiring medical attention abroad.

"This reduces to 18 per cent for over-55s, who are then slightly more likely to claim for a stomach upset – 26 per cent rather than the 24 per cent national average – or pre-existing medical conditions – 13 per cent rather than the 12 per cent national average,” says AllClear's Chris Rolland.

Scott Adamski, Head of US Field Sales and Licensing for AIG Travel in the US, says the company is seeing increased demand for travel cover for adventurous older travellers. “We have listened to our clients and travel advisors specific to the needs of an evolving travel world,” Adamski said. “[We do] experience increased assistance requests from more mature travellers, but bad things can happen to travellers of any age. We have developed a host of policy enhancements as well as niche, optional bundles … If a traveller of any age prefers even higher medical expense benefit limits, our Medical Bundle expands these benefits even further.”

AIG does not require medical underwriting in the US market and offers the opportunity to purchase its plans as little as 24 hours before departure. “That said, any traveller who purchases our travel insurance plan within 15 days of the initial deposit may be eligible for a waiver of the pre-existing medical condition exclusion,” explained Adamski.

GeoBlue's Jill Cappelli notes that actuarial tables currently relate increasing age with higher medical costs. That is not likely to change in the near future, she says. However, factors such as the growth of this demographic and improved medical and financial wellbeing may change the age/cost response curve over time. “Some carriers may find that targeted marketing to a more prosperous senior market may drive better loss outcomes by convincing healthy older travellers to participate in a market they may have avoided because the available offerings weren't tailored to their needs,” she said.

Travel insurers are far from unaware of the lucrative potential of the mature traveller. As that market grows – and goes on getting older – they will, however, need to think hard about its specific needs. ■