At the start of 2020 the IFoA launched its campaign on what we termed the ‘Great Risk Transfer’. Throughout the year we explored the trend to transfer risks from institutions – such as employers, the state, and financial services providers – to individuals.
Evidence of this shift exists in a number of areas of public policy and actuarial work. It amounts to a profound change in the way that individuals organise their life and finances, and represents one of the most significant yet little understood social, financial, and political challenges of our time.
While it is true that levels of numeracy, financial literacy, and understanding of risk are generally low, even many of those who consider themselves more financially aware feel ill-equipped to deal with the risks they now face.
Our work suggests that the causes of this trend are complex and cover a variety of factors, including increasing longevity, technological advances, the low interest-rate environment, and changes in financial regulation. We believe there is an urgent need for practical solutions, exacerbated by the pandemic, as individuals are confronted by the need to manage risks they did not have to worry about previously.
Between February and May last year we ran a call for evidence so that we could gather first-hand examples of this transfer and the ways it was impacting on the public. This evidence then informed subsequent roundtables, from which we developed the suggested solutions into practical recommendations.
With the publication of our final Great Risk Transfer report, we will be focusing on these specific recommendations over the coming months, seeking to engage with influential stakeholders such as Ministers, parliamentarians, regulators, and industry groups to address the challenges highlighted over the course of the campaign.
Our final report in the Great Risk Transfer campaign brings together a broad body of evidence to make recommendations to address two key challenges:
To find out more about how these challenges can be addressed, download the final report of the Great Risk Transfer.
In this report, the IFoA has made a number of recommendations to government, regulators, and the financial services industry to address some of the negative impacts of the Great Risk Transfer. We will:
By taking these steps we believe we can have a positive impact in addressing the challenges of the Great Risk Transfer.
If you would like to talk to us about working to address these issues and our recommendations, please contact firstname.lastname@example.org .
At our launch event in January attendees heard from the Australian researcher Myra Hamilton, whose work engages with the Great Risk Transfer, not only from a financial services point of view but more broadly in terms of changes to our politics and society over recent decades.
Dr Arjen van der Heide’s research explores how risk has been individualised in the UK life insurance industry over recent decades.
The IFoA is a leading voice for the actuarial profession in the field of policy development and thought leadership.
Find out more about our work.