By Luca Russignan, Head of Insurance – Capgemini Research Institute for Financial Services
This means that for every 100 working-age people, there will be 26 seniors to support instead of 16, a staggering 63% increase. Outside Africa, this intensifies to nearly one dependent for every three workers.
This demographic shift will fundamentally alter risk profiles that will put immense strain on insurers.
Concentrated urban risk pools: Nearly 70% of the global population will live in urban centers by 2050, with almost half of urban dwellers over age 50. This unprecedented wealth and population concentration in cities creates amplified risk zones where aging populations face heightened exposure to both natural catastrophes and infrastructure vulnerabilities.
Shifting consumer behavior: Aging populations prioritize experiences over possessions, with 45% of consumers planning to increase spending on experiences like travel and recreational activities, while 70% do not plan to change their housing situations. These evolving preferences demand new protection models focused on usage rather than ownership.
Evolving workforce demographics: As aging populations create labour shortages, output per worker is projected to rise 50% globally by 2050 through technology adoption. This demographic-driven automation creates new liability exposures as responsibility shifts from human to machine decision-making.
What does this mean for the property and casualty insurance industry
Capgemini's 2025 World Property and Casualty Insurance Report reveals that these demographic forces will reshape P&C premiums, with commercial lines projected to grow at 4.4% annually, outpacing personal lines at 3.3%. For actuaries and risk professionals, this transformation requires an innovative approach across major lines:
Personal auto coverage transitions to commercial liability protection.
As populations age, mobility patterns shift. Older consumers drive less frequently and increasingly rely on alternative transportation. With over 65% of new car sales in Europe and the US projected to be autonomous vehicles by 2040, risk exposure gradually transfers from individual drivers to vehicle manufacturers and service providers.
Property risks transform from asset protection to resilience-based coverage.
Aging populations and smaller family sizes transform property needs. Older homeowners, who express a desire to age in place, require protection focusing on accessibility and support to enable independent living. The rise in single or two-person households drives demand for smaller dwellings and rentals with different risk characteristics. In commercial lines, changing workforce demographics transform space utilization patterns and building design requirements.
An aging population transforms liability exposures across economic sectors.
An aging workforce also increases the potential of workplace injury and drives adoption of automation. Simultaneously, older consumers’ preferences for services over products shift liability risks from manufacturing defects to service delivery failures. This creates complex liability allocation challenges between human operators and automated systems with greater emphasis on professional liability and duty-of-care exposures.
How must insurers react to this demographic shift
Success requires organizing key initiatives across three-time horizons: now (building the foundational strengths), soon (emerging exposure adaptation), and later (complete 2050 transformation) – altogether, creating a roadmap for continuous evolution.
Let’s look at how these three high impact focus points will pay dividends:
Reassess strategy for demographic change: Insurers can recalibrate geographic focus based on differential aging rates, develop age-sensitive service models that move beyond risk transfer to comprehensive assistance, and build ecosystem partnerships addressing aging consumers' unique needs.
Enhance operating models and technology infrastructure: Insurers need to enhance their operating models to handle large-scale claims and reinvent the data model to incorporate more granular demographic insights. They should also focus on building resilience through scalable systems that can manage synchronized claims from interconnected events. Developing new risk-sharing liability frameworks to assess human and machine co-responsibility is essential.
Strengthening risk management and capacity deployment for demographic transformation: Insurers should continuously evolve their strategies to address the complexity of converging demographic and climate trends. This includes redefining underwriting models with aging-related factors and developing risk intelligence to optimize capacity across regions with different demographic trajectories. Additionally, a greater focus on creating innovative coverage for emerging liability exposures, such as self-operating machines and AI applications that will augment humans to cope with an aging workforce.
The path forward
The demographic revolution isn't a distant scenario: it's already reshaping risk landscapes and market dynamics. Insurers who delay response face eroding market share and profitability challenges. Traditional customer segmentation models will soon become outdated as aging populations drive fundamental shifts in risk profiles and service needs.
The urgent question isn't whether demographic shifts will transform the insurance business, they already are. What matters is how should insurers reposition their portfolios as demographic-driven risk exposures dramatically change? What concrete steps can the industry start taking today to build the capabilities essential for thriving in an aging, urban world tomorrow?
The answers will determine which insurers emerge as leaders in the new demographic reality, and which become increasingly irrelevant.
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