The insurance industry has underperformed global GDP growth since 2000 – a period in which many risks have grown more acute. As a result, sizable protection gaps – usually represented as the difference between economic losses and insured losses – have emerged in many regions and for many lines of business. Estimates of the protection gap for global natural catastrophe risks are shown in chart X.
Insurance Spending as % of Global GDP, 2000 - 2022
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Source: OECD
A Yawning Gap – Natural Catastrophe Insured and Economic Loss Estimates, 2022
% uninsured (protection gap)
Insured losses
Economic losses
Munich Re
$120 billion
$270 billion
56%
Swiss Re
$125 billion
$275 billion
55%
Aon
$132 billion
$313 billion
58%
It is not clear how much this weak growth performance has been caused by weak insurance brands – another important factor may be the high expense load borne by much insurance, which diminishes the value of the product. But particularly in personal lines and small commercial
insurance markets it is likely that weak brands have retarded the industry’s growth potential significantly. Certainly a belief that this is the case has driven the development of embedded insurance, through which insurers seek to distribute their products through stronger brands.
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