NAT CAT AND PROTECTION GAPS

CLOSING PROTECTION GAPS

Availability and affordability of insurance

A GFIA perspective

Across the world, concerns about the cost and availability of insurance are rising. Barriers stem from various sources, such as the burden of hidden taxes, complex regulation, growing and emerging risks. Without real progress, whole communities – particularly those in vulnerable areas – risk being left without protection when they need it most. To move forward, the focus must be on relieving the external pressures that make insurance harder to deliver affordably and at scale.

Having been part of the Global Federation of Insurance Associations (GFIA) for many years and recently appointed President, I have gained a deep understanding of the growing challenges insurers face in ensuring that coverage remains both accessible and affordable. The increasing frequency of natural catastrophes, the rise of new risks like cyber threats and the evolving needs of ageing populations have all driven up demand for insurance. At the same time, economic and regulatory pressures on insurers are making it increasingly difficult to offer affordable coverage, particularly in high-risk areas.

All is not lost, however. We know that these challenges can be overcome with smart partnerships between insurers and policymakers globally.

Understanding the insurance protection gap

The issue of the protection gap – the difference between the insurance coverage people need and the coverage they have access to – is a key concern for GFIA. It is particularly evident in emerging markets and low-income communities, where access to even basic insurance products can be limited or prohibitively expensive. As risks like climate change continue to escalate, and new threats emerge, the protection gap is only widening.

GFIA believes that addressing the protection gap requires a multi-stakeholder approach, combining efforts from both the private and public sectors. Insurers have a critical role to play in developing innovative solutions that meet the diverse needs of different communities. However, the industry also requires close collaboration with governments, regulators and supervisors to create an environment where insurance can thrive and become accessible to all.

Innovative solutions and the role of technology

One of the most promising areas of progress is the development of innovative insurance models. Technologies like parametric insurance, telematics and micro-insurance offer flexible, cost-effective ways of providing coverage to underserved populations. Parametric insurance, for example, allows for quicker payouts based on predefined parameters, such as the intensity of a natural disaster, and can help alleviate the financial burdens faced by those affected by events like hurricanes or floods.

Micro-insurance is another innovative solution that has proven effective in providing affordable coverage to low-income communities, particularly in developing countries. Through partnerships with governments, NGOs and local businesses, insurers can offer micro-insurance products tailored to the needs of specific populations, covering risks such as crop failure, health emergencies or small-scale property damage.

“Innovation, collaboration and regulatory support will drive progress in bridging the protection gap and building a more resilient and inclusive insurance market.”

The role of regulatory support

As insurers explore new solutions, it’s vital that the regulatory environment supports innovation rather than holding it back. Outdated or overly complex regulations create barriers to the development of new insurance products and impact the sustainability of even existing coverage. To prevent this, GFIA advocates for the reduction of the regulatory burden, promoting harmonised and simplified regulatory frameworks that allow insurers to operate more efficiently while ensuring consumer protection.

A collective effort to close the insurance gaps

Addressing the challenges of insurance availability, accessibility and affordability is not something that can be achieved in isolation. It requires concerted efforts from insurers, governments, international organisations and other stakeholders. At GFIA, we are committed to working with our partners across the industry and the public sector to find solutions to close insurance gaps.

In line with this commitment, the 2025 GFIA report, to be published in the fourth quarter of this year, will provide a deeper exploration of the challenges surrounding insurability and affordability. It will also showcase steps the insurance industry is taking to address these issues and reduce the protection gap on a global scale. This report will serve as a central resource for driving future discussions and actions in the industry.