Two facts about the demographic transition in the industrialized economies are particularly robust and well-established. First, gains in life expectancy have been huge over the last decades and the average age at death still keeps increasing rapidly. Second, the decrease in mortality rates comes to a large extent from the fact that many severe conditions do not kill patients any more, while they still lead to serious impediments to the most basic everyday activities. As a direct consequence of these developments, people today typically spend a substantial amount of time in retirement and a large fraction of the elderly becomes invalid and dependent on care at some point of their life. Economic theory suggests that this should lead to a sustained demand for insurance against the financial consequences of a very long life and against the high costs of foster care.
However, the private markets for annuities and long-term care insurance are surprisingly small. The existence of mandatory public old-age and health insurance can explain the low demand for these products to some degree, but is not satisfactory as an explanation by its own. Is there a way to rationalize the small size of the private markets? What are the major determinants of the demand for annuities and long-term care insurance? Would it be desirable and possible to foster insurance demand? These are some of the interrogations that will be addressed during the workshop.
The two-day workshop, organised by the ETH Risk Center of the Swiss Federal Institute of Technology Zurich, will bring together leading academics and practitioners to discuss these challenges.