Insurance Executives See Ethical Obligation to Close $1.8 Trillion Protection Gap
CARY, N.C. – A recent survey of over 500 insurance leaders from 17 countries highlights the industry’s perspectives on critical issues. The research, conducted by Economist Impact in collaboration with data and AI leader SAS, reveals a strong consensus regarding the global protection gap and the challenges facing the insurance sector through 2040. The study explores risks, opportunities, and trends that will shape the industry in the coming years.
The most striking finding reveals that 78% of insurance executives believe their industry has “an ethical obligation” to close the global protection gap. This gap represents the difference between insured and uninsured losses across various segments, including life, health, natural catastrophe, and crop insurance, and was last estimated at $1.8 trillion.
Key findings are summarized in the “Revealing the paths to 2040: a global industry survey report,” which is complemented by a data dashboard, and include:
- Climate Change and its Impact: The climate emergency is considered a significant factor, with 76% viewing closing the protection gap as a “significant” business opportunity amid rising losses from climate-related events.
- Technology’s Central Role: Surveyed executives predominantly see technology as the most effective tool their organizations can leverage to address the protection gap and navigate future challenges.
- Rising Fraud and Cyber Risks: The evolving threat landscape includes rising fraud and cybersecurity risks contributing to the complexity of the sector.
Experts from The World Economic Forum, The Geneva Association, Economist Impact, and SAS will explore the research in depth in a webinar on March 6.
Speaking on the survey’s findings, Sabine VanderLinden, CEO and co-founder of Alchemy Crew, commented, “Insurance has always been about building resilience, and today, the stakes have never been higher. With a $1.8 trillion global protection gap and mounting challenges, from climate change to fraud and cyber threats, the industry stands at a crossroads.”
The Widening Divide
In 2024, economic losses from catastrophic events totaled $368 billion, with 60% of those losses uninsured. A significant portion of this stems from communities vulnerable to climate change impacts, making affordable insurance difficult to obtain, particularly for those in high-risk markets.
The protection gap extends to health and life insurance, especially impacting underserved populations. As VanderLinden pointed out, “Extreme heat and cold, for instance, are projected to particularly harm and kill children, the elderly and the socioeconomically disadvantaged.”
Sean Kevelighan, CEO of the Insurance Information Institute, noted, “As financial first responders, insurance leaders understand that shifting from detecting and repairing after catastrophe to predicting and preventing is critical to addressing increasing climate risk and insurance affordability challenges at hand.”
Internal Barriers to Progress:
Executives identified key internal barriers, including:
- Understanding of consumer needs (76%)
- Understanding of the external environment (75%)
- Outdated tech systems (75%)
- Working in silos (74%)
- Slow rate of innovation (74%)
- Lack of resources (73%)
Franklin Manchester, Principal Global Insurance Advisor at SAS, commented, “Three-quarters [77%] of insurance leaders identify lack of trust in the industry as a significant barrier to closing the protection gap, and it’s no wonder why. As carriers retreat from disaster-prone areas and data privacy violations are revealed, insurers must act decisively to regain consumer and regulator confidence.”
Technology as a Solution
Executives identified several technology-driven approaches to close the protection gap, with the most popular being:
- Using technologies to make insurance products more affordable (48% – currently deploying at 40% of orgs)
- Developing innovative insurance products like parametric or microinsurance (42% – in action at 40% of orgs)
- Leveraging data to better assess risks and design products (39% – work in progress at 32% of orgs)
VanderLinden concluded, “The future belongs to those who harness innovation – AI, data and emerging frontier technologies – to make insurance not just more accessible but more equitable. The industry must certainly cover risks. It also must empower communities, create trust and bridge the divide for a more secure tomorrow.”
Explore the study’s findings with an interactive experience at SAS.com/insuranceforward.
