Insurance protection gap is widening in Asia’s emerging markets
Risk exposures in emerging markets in Asia are growing faster than insurance penetration and the insurance protection gap is therefore widening, according to a Peak Re report.
Only 5 percent of economic losses are re/insured, and about 60 percent of the financial resources required to recover property damages come from private sources and not from governments and insurers, the report says. As a consequence, the affected people and their families may be driving into poverty, Peak Re suggested.
In order to address the issue, Peak Re believes that re/insurers need to understand the root cause of insufficient insurance demand in Asia – with one of the key underlying factors being the missing trust between policyholders and insurance companies.
Peak Re suggested the reasons for underinsurance in Asia – a lack of trust on the part of customers in what insurers offer, and a corresponding lack of focus by insurers to build that increased confidence – are within the insurance industry’s control.
Peak Re said that in order to build this trust, greater transparency of information must be provided by the insurer, and increased presence and visibility in the market are also required, as well as simple and customer-friendly products and purchasing channels, and regular personal interaction.
“It is time for insurers to place more emphasis on the needs and expectations of their customers, especially in the digital age,” said Peak Re.
Franz-Josef Hahn, CEO of Peak Re, commented: “For Peak Re it has been a logical step to choose the topic of protection gap for our inaugural economic research study, as our mission is to harness progressive and innovative re/insurance opportunities for sustainable economic development and growth across Asia.
“Our shareholders, Fosun International Limited and the International Finance Corporation, as well as Peak Re’s employees strongly support this mission. Sharing our insights is a welcome opportunity to give something back to our stakeholders.”
