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Understanding and addressing global insurance protection gaps

Friday 11.05.2018 // Asia Insurance Review // Dr. Kai-Uwe Schanz

Dr Kai-Uwe Schanz of The Geneva Association offers an updated quantification of protection gaps in the areas of Nat CAT, cyber, healthcare and pension risk. Risk exposures, driven by digitisation, urbanisation and climate change, as well as value accumulation and concentration, tend to outgrow insurance premiums, leaving individuals, households, firms and the public sector alike underinsured.

The most appropriate definition of insurance protection gaps is the difference between the amount of insurance that is economically beneficial and the amount of coverage actually purchased. The insurance protection gap is hard to measure and subjective. Therefore it is replaced by an indicator comparing covered loss to total economic loss. This figure, however, needs to be put into perspective as a certain level of risk retention makes economic sense.

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