Age is Just a Number. But is it Still the Right Measure of Risk?

This article is by Laura Ashforth, CEO of Lateral (specialist 60+ health insurer)

Laura Ashforth is the CEO and co-founder of Lateral, a health insurance start-up reimagining how people over-60 access, navigate and finance their healthcare. A former Managing Director at insurtech unicorn Zego, venture capital investor at Atomico and investment banker at Morgan Stanley, Laura has spent her career building, scaling and backing high-growth businesses across insurance, financial services and technology.

She founded Lateral alongside Steven Mendel, co-founder and former CEO of ManyPets, to address the growing gap between longer life expectancy and healthy ageing, creating a more affordable and preventative approach to healthcare for later life.

Age has always been one of insurance’s best predictors

I’ve spent the last two years building a health insurer exclusively for people over 60. In that time, I’ve become convinced that the further you get into later life, the less age alone tells you about a person’s health, behaviour and future needs.

Time and again I’ve met customers who on paper, and therefore on an underwriting submission, appear remarkably similar. They’re the same age, don’t smoke, live in similar parts of the country and often have comparable financial circumstances. Yet the similarities often stop there.

At the extreme, take two people aged 73. One spends their weekends cycling 100 miles, volunteers in their local community, cooks from scratch, attends regular preventative health screenings and knows exactly what their blood pressure and cholesterol look like.The other lives a sedentary and isolated lifestyle, has limited health education and engagement and has already begun adapting their daily life around their declining mobility.

They are the same age, but they are ageing very differently and as a result represent very different risk profiles. This has made me reflect on one of the most fundamental assumptions used in insurance.

Age has been one of the industry’s most valuable actuarial variables and for good reason. It is objective, simple to collect and across large populations, is highly predictive of healthcare utilisation, morbidity and mortality.

It’s easy to understand why age will remain one of the strongest predictors of risk for many years to come. But I believe now is the right time to challenge how heavily we rely on age when assessing future health risk.

A new generation of retirees

Lifespan and health span are both becoming increasingly important considerations for insurers. We are living longer, but not everyone is living well for longer. The variation within any given age group is becoming increasingly pronounced. That growing variation matters because it challenges both how we assess risk and how we design products for later life.

Today’s retirees are entering later life having experienced a very different health environment from previous generations. Smoking rates have fallen dramatically, vaccinations have transformed public health, cardiovascular medicine has advanced enormously and many of the physically demanding occupations that characterised previous generations have declined. At the same time, new public health challenges, including obesity and sedentary lifestyles, have emerged.

Our understanding of disease has changed too. Earlier diagnosis, better treatments and improved management of chronic conditions mean many people are remaining active for years beyond the point where previous generations might have expected to slow down. A 70-year-old today is not the same as a 70-year-old was thirty years ago, nor are all 70-year-olds ageing in the same way.

Looking beyond age

If age is becoming a less complete proxy for future health risk, what should sit alongside it?

I believe the most valuable insights will come from understanding an individual’s health trajectory. Are they physically active? How engaged are they with their health? Are they monitoring their key health indicators over time? Do they understand their own health well enough to respond when something begins to change?

These are no longer abstract questions. Annual health checks, digital health services and a growing range of biometric and behavioural data mean insurers have access to a much richer understanding of how people are ageing than was ever previously possible. Yet this opportunity has so far not been used to its full potential.

Health trajectory could become one of the most valuable risk variables our industry has available.Historically, underwriting has focused on establishing a customer’s health at a particular point in time. Increasingly, understanding the direction and rate of change of an individual’s health tells us something that age alone never can.

The next competitive advantage

Perhaps the biggest opportunity, however, lies beyond underwriting altogether.

For most of its history, insurance has focused on measuring and pricing risk. The next generation of insurers has an opportunity to go further by actively influencing it. Through preventative health services, personalised interventions, behavioural nudges and better engagement, insurers can improve the health of the very populations they insure.

I want to see more insurers taking on the challenge of understanding where their customer’s health is going, and helping them to change that journey for the better.