Awareness is needed on microinsurance: Swiss Re

More awareness must be raised around the benefits of the microinsurance industry, according to Kurt Karl, chief economist, Swiss Re, speaking at a press conference in Monte Carlo at which they unveiled the company’s latest sigma report, and reinsurers should be involved in growing this market.

The economist said that as poorer countries progress to higher income levels in their population, they need to be made aware of the benefits of insurance earlier.

“To me, the microinsurance industry is something we have to be involved in, particularly in emerging markets because a very low-income part of the global economy needs protection, so we have to find ways to be able to provide it for small farmers, small homeowners,” Karl said.

He added that the industry has a duty to help protect those in poorer countries, despite low profitability.

“This is a small market, but even if it’s small revenues and a little bit of profit, I think it’s important for the industry to provide support,” he said.

Karl’s colleague, Edouard Schmid, head of property and speciality at Swiss Re, agreed that microinsurance should be a focus for the industry, although he also admitted that in many instances it was “really challenging to make viable”.

The sigma study also described underinsurance in general is a “global and growing challenge”.

Swiss Re reported that the global natural catastrophe property protection gap has risen steadily over the last 10 years and 70 percent of the economic losses in this period, $1.3 trillion, were uninsured.

The largest uninsured natural catastrophe exposures are in the US, China and Japan.

This underinsurance issue needs to be solved by innovative thinking by insurers and governments, according to Swiss Re.