24 June 2018

Insurance Europe: Bold policymaker action is vital to close global protection gaps

Policymakers must act decisively to stimulate individuals to save more for their retirement, encourage the uptake of cyber risk insurance and mitigate the impacts of natural catastrophes and cyber risk, said Insurance Europe’s president, Andreas Brandstetter.

The conference, which focused on ways to overcome underinsurance and reduce the harm caused to economies and individuals by gaps in protection, took place in Madrid.

In his opening remarks, Brandstetter warned how governments around the world face a huge challenge in providing for retired citizens. Changes in demographics mean the proportion of workers to retirees is decreasing in most countries, significantly impacting pay-as-you-go pension systems. In addition, many people are simply not saving enough for an adequate retirement income.

Brandstetter said that, worldwide, the gap is estimated to be a staggering $70 trillion (€59 trillion). On this issue, policymakers must be bold. They need to be transparent about the state of public finances, and make it clear that people need to save more for their retirement. Policymakers must then encourage them to do so by providing the right incentives.

Brandstetter also outlined the scale of the underinsurance of natural catastrophe risk. For example, in 2017, natural disasters created losses of over $300bn (€250bn), but only about a third of the losses were insured.

This means governments, companies — and individuals — faced a bill of around $200bn (€170bn). In just one year. While insurers have a role to play, policymakers must take bold action to limit climate change, while also ensuring society becomes more resilient through adaptation to the effects of a changing climate.

On cyber risks, Brandstetter warned that insurers’ ability to offer cover is being hampered by a lack of data on which to base their underwriting.

Press release

© InsuranceEurope