Global protection gap at $2.8tr; cyber dominates uncovered P&C threats
The global protection gap runs to $2.8 trillion across pension, cyber, health and nat cat, the Global Federation of Insurance Associations (GFIA) has determined.
Global pensions now show a protection gap of $1 trillion annually, ahead of a cyber protection gap estimated at $900 billion, a health protection gap estimated at $800 billion and a nat gap coverage gap at $100 billion.
“These four protection gaps are equivalent to about 3% of global GDP — and this does not even touch on the severe impact on human lives and related suffering,” authors note.
The pace of technology is the driver to cyber and it places the protection gap growth squarely in North America and Europe.
Demographics, life span after retirement and birth rate, are widening the protection gap in pensions, a gap that is only modestly papered-over by under-funded pay-as-you-go programmes. Rewriting pay-as-you-go at fair value as annuities would increase the pension gap several times over.
Nat cat risks are levered primarily on migratory trends and property and valuation growth in high-risk coastal areas.
GFIA president, Susan Neely (pictured) commented: “Insurers around the world play a vital role in helping to protect people and businesses from the risks they face, and to recover when those risks materialise. However, as this report highlights, a range of factors have led to huge and growing global protection gaps that could have profound impacts on people’s lives and livelihoods.
“Insurers can, and are, taking steps to address these gaps. These include using technology to assess risks and claims, and to make insurance more accessible for people and businesses. However, closing the gaps will also require action from policymakers to create environments in which risks can be managed and mitigated. These actions will help keep risks insurable and insurance protection affordable.”
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