Closing the Global Protection Gap: An Ethical Imperative for Insurers?
According to fresh findings from SAS, a majority of insurance executives feel a strong ethical obligation to help close the global protection gap. This research, conducted by Economic Impact and sponsored by SAS, sheds light on the industry’s perspective on this critical issue.
In the “Revealing the paths to 2040: global insurance survey report,” 79% of insurance executives surveyed stated their belief that the industry has an “ethical obligation” to address the protection gap. Additionally, three-quarters of the respondents view closing the gap as a significant business opportunity. The global protection gap, which encompasses life, health, natural catastrophe, and crop insurance, was last estimated to be a staggering $1.8 trillion.
The survey, conducted in September and October 2024, included 500 executives. Results show that diminished trust and lack of affordability are seen as significant hurdles by three out of four respondents. However, they also identified technology as the most effective tool for their organizations to tackle these challenges and close the gap.
During a March 6, 2025 webinar about the SAS and Economic Impact’s publications, panelists analyzed the survey findings and shared insights into the implications. Notably, the discussion moved beyond climate recovery and towards the insurance industry’s role in building climate resilience.
Executives showed optimism, with 76% viewing the closure of this gap as a significant business opportunity. Market dynamics and artificial intelligence are seen as pivotal trends that are likely to shape the industry going forward, and these were largely viewed as opportunities rather than as risks.
Andre Belelieu, the head of financial services from the World Economic Forum, observed that the insurance workforce could be set for a huge shift in the coming years. “The workforces that were built for the insurance companies of the past are not going to or cannot look like the workforces of the insurance industry in the future…”
Belelieu added, “I think the industry is thinking very deeply about where it needs to go in the years ahead, and as you see through the report, there’s a lot of different areas where it needs to play a critical and central role in helping us devise solutions and innovations for the future.”
Lack of trust in the industry was identified as a significant barrier, with 77% of executives citing it as an issue. While there is widespread optimism about innovation to close the protection gap, the survey revealed that most insurers have not yet begun implementing technology to put that into practice.
Key challenges facing organizations, as highlighted by the survey, include climate risk, geopolitics, and cybersecurity. Internal barriers that can limit organizations’ ability to take advantage of industry trends, include: understanding of consumer needs, outdated technology systems, working in silos, slow innovation rates, resource limitations, and a focus on the near term.
Belelieu noted the industry’s need to adapt: “What we see is an industry that’s looking to adapt and remake itself across many different areas at the same time, which for any industry, is particularly challenging. For the insurance industry, which is traditionally innovative more slowly than other areas, it’s quite an undertaking.”
He also expressed optimism: “I do share some of the optimism…in the insurance industry’s ability to adapt to many of these challenges, mostly because it has to. If you look at what the insurance industry is faced with, what our economy and societies are faced with, whether it’s climate, technology or demographics… insurance is central to the solutions we need to build for the world.”
Forty-eight percent of respondents believe that using technologies to make insurance products more affordable will help address the protection gap. However, only 40% of the respondents’ organizations are currently deploying this technology to address the gap.
Panelists also highlighted avenues for addressing the protection gap. These include designing innovative insurance products such as parametric or microinsurance, engaging with regulations, and leveraging data for improved risk assessment and product design.
Stu Bradley, SAS Senior Vice President of risk, fraud, and compliance solutions, spoke on the shifting dynamics of the consumer and the rising middle class, citing them as a significant trend. He explained, “That changing dynamic is also changing the consumer expectations around how insurance should be offered, that we used to do risk-based segmentation based on geography and other types of demographics, and now consumers expect a segment of ‘one’ based on their individual and specific behaviors and overall risk factors. As that pertains to IT and needed transformations in the industry, this is going to mean different data. It’s a completely different data ecosystem that’s required to be able to meet those consumer expectations.”
