The protection gap. It’s a phrase that will be increasingly heard over the coming years—because it is getting bigger. The protection gap is the difference between insured losses and economic losses, or uninsured losses. The protection gap is a global problem and affects emerging nations and developed countries alike.

Executive Summary

While evidence shows the importance of insurance for a quick economic recovery following catastrophes, the protection gap between insured and economic losses continues to be a global problem, affecting emerging nations and developed countries alike. Executives discussed the issue during the reinsurance Rendez-Vous de Septembre.

The problem, emphasize insurance executives, is that properties and economies with high insurance penetration recover much more quickly after a natural disaster than properties that rely on governments for their recovery.

Swiss Re estimates that the global protection gap for weather-related risks is at least $180 billion. It’s a huge figure and a huge challenge because the solutions potentially exist, but they are not being used, said Christian Mumenthaler, group CEO of Swiss Re, who spoke on a panel on underinsurance at the reinsurance Rendez-Vous de Septembre (RVS).

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