Business News and Trends You Need to Watch
From my earlier post about downsizing industries, comes the news that QBE, one of the world’s largest insurance companies is posting a $1.25Billion loss, down from a profit of $844million. THIS IS HUGE.
It sold off an arm of its insurance company to Zurich, so no doubt Zurich will be in trouble over the next 12-24 months.
Insurance and Banking
Insurance, like banking, has already undergone massive cost cutting and has embraced technology with gusto. All the typing of reports that used to be done by typists, are now done by voice recognition. This explains why my transcription business has hit the wall 3 years earlier than I thought it would. Over 1000 jobs were cut OVERNIGHT. These jobs were all subcontracted by the way so there was no warning of what was coming, just a thanks for playing we don’t need you anymore email one day.
With global climate change happening more rapidly (yes it’s a thing get over it already) storms, droughts and more violent storms will be more common and hence claims on insurance significantly higher.
Health insurance is about to go belly up. It’s simple maths. How long have you been without yours? I cut mine nearly 2 years ago now. The premium was more than my weekly house payment so I called bullshit on it. It would have been worth it if I didn’t also have to pay out of pocket expenses on top of my premiums. Instead I have a savings account that I put my premium into and save up for health emergencies or elective stuff (you can stop laughing I know we can’t afford elective stuff).
Energy
Coal is another industry to watch closely. Quietly in the background, in the deserts of Australia and out to sea, wind farms have been built along with solar farms. The stroke of genius in solar was the government rebate for everyone to install their own panels. This meant the risk of weather taking out a farm has been spread across the entire country. I wish I had thought of that idea. Be warned though. If you are on the grid, you are vulnerable to price hikes. Just because solar is cheap (er) now, don’t expect it to remain that way. Those power companies still have their shareholders to answer to so expect significantly price hikes within 5 years. Preferably get off the grid altogether. It’s the only real way to maintain your overhead.
Health
Health is about to be disrupted. There will still be a need for doctors, at least for the next 10-15 years, but beyond that it’s hard to guess how many will actually be needed. Nurses will be the practitioner you will see mostly for cuts, abrasions, cold and flus, fractures and assessment of more serious conditions. E-Health is coming – faster again than anticipated. The disrupter in this sector will bypass the legalese and snail pace of the technology of government health systems and provide an alternative altogether. Your health records may be in the hospital system now, but a quick note to the health provider and they can be released to whoever. Your local GP can be anywhere on the planet and have access from anywhere with internet, to your entire health record. Again, government health won’t see this coming, but it is. Medicare was broken when I started in the health sector 25 years ago. It is only immigration that has allowed it to continue to be funded, but it’s about to break into thousands of pieces. Again, it’s simple maths. The cost of single patient with diabetes is upward of $50K a YEAR. With this condition alone rising to plague proportions, it’s easy to see that your Medicare levy is barely covering their GP visits.
Housing
Ah housing how do I love and hate thee. If the sale of my house is anything to go by, we are in serious trouble in this sector. I got it valued by two valuers in October 2017, both came in at $485K By December 2017 it was worth $450K and that is what I just sold it for February 2018.. So in 3 months, I lost $35K off the value. That is a big loss. And it’s not finished yet. I wasn’t even close to being 95% mortgage, but my neighbours are. Houses they purchased a year ago at 95% mortgage are now valued at less than they borrowed. If they can afford to hold and pay their mortgage, which statistics suggest there is more mortgage stress than ever before, then owners may be able to weather this ‘dip’. Some economists are predicting an undersupply in housing by 2020 even given the current oversupply of apartments in every capital city. I think the fundamental thing people have overlooked here is that people don’t want to live in apartments. And if they do, the body corporate costs are only just below mortgage payments so it doesn’t make economic sense at all.
Reflection
As over fifty’s we have to take a step back and look at the big picture and not leave our head in the sand any longer. Where are you placed in your industry? Where is your mortgage sitting? Do you have equity in your house? If so it might be time to cash in. If not, time to get another side job to help pay that mortgage off, because also by the way, interest rates will go up by late 2018 and into 2019, so not only will the value of the home be beneath the loan amount, the repayments will also increase. Even those in their late 30’s and early 40’s need to take heed of this information to plan for their 50’s and beyond. Life is changing rapidly. In the past 2 years alone, enormous technologically strides have been made in industry which are about to impact significantly on employment, and employability.
I have my Plan B which I will go into detail about in another post but I urge all of you, NOW, to start looking at the big picture and start preparing for the giant shift of the sands that is happening right now.
