Insurance execs say closing £1.4 trillion protection gap is an ‘ethical obligation’ for industry

A study by SAS and Economist Impact of more than 500 global insurance leaders explores their sentiments on climate risk, data and AI innovation, and trends to watch over the next 15 years. 

The global protection gap – the difference between insured and uninsured losses across life, health, natural catastrophe and crop insurance – was last estimated at £1.4 trillion. A new “future of insurance” survey of more than 500 insurance executives from 17 countries by Economist Impact and data and AI leader SAS reveals that 79% of sector leaders believe that the industry has “an ethical obligation” to close the protection gap.

Furthermore, surveyed executives primarily see technology as the most effective avenue for their organisations to address the protection gap. And as losses to insurers from climate change mount, three in four (76%) consider closing the protection gap a “significant” business opportunity.

The ‘Revealing the paths to 2040: A global industry survey report’, which is complemented by a data dashboard, examines the risks, opportunities and trends insurance leaders believe will shape the insurance industry in years ahead. Alongside the global protection gap, these trends include the climate emergency, data and AI innovation, and rising fraud and cybersecurity risks.

Experts from The World Economic Forum, The Geneva Association, Economist Impact and SAS will explore the research in depth in a webinar - Four Futures of Insurance: Strategic Insights from Economist Impact Research.

“Insurance has always been about building resilience, and today, the stakes have never been higher,” said Sabine VanderLinden, CEO and co-founder of Alchemy Crew. “With a £1.4 trillion global protection gap and mounting challenges, from climate change to fraud and cyber threats, the industry stands at a crossroads.”

A widening divide

In 2024, increasingly catastrophic fires, flooding, storms and earthquakes cost £289 billion in global economic losses; 60% of those losses were uninsured. In the property and casualty sector, this primarily stems from vulnerable communities, often in high-risk markets, where the effects of climate change make buying insurance difficult to afford or impossible to purchase altogether.

The protection gap also includes fiscal losses to historically underserved populations in health and life insurance, which will grow as climate change continues to unfold. Extreme heat and cold, for instance, are projected to particularly harm and kill children, the elderly and the socioeconomically disadvantaged. Improving access and offering affordable coverage to underserved markets will be imperative as health and life insurers adapt to worsening climate risk.

"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," said Sean Kevelighan, CEO of the Insurance Information Institute. 

"What's more, finding ways to incentivise this shift in behaviours and mindsets amongst our customers and communities will reduce risk levels as well as the protection gap."

What barriers prevent action?

Insurance executives regard the following as top barriers that “significantly/very much” limit their organisation’s ability to take advantage of industry trends, including closing the protection gap:

• Understanding of consumer needs (76%)
• Understanding of external environment (75%)
• Outdated tech systems (75%)
• Working in silos (74%)
• Slow rate of innovation (74%)
• Lack of resources (73%)

“Our study also shows that many insurance leaders we spoke to (77%) believe that a lack of trust in the industry is a barrier to closing the protection gap,” said Andrew Pollard, insurance specialist at SAS UK & Ireland. “This doesn’t come as a surprise as companies retreat from disaster-prone areas and have been criticised for data privacy violations.

“All of these situations can impact consumer and regulator confidence, and carriers must act decisively, while also being transparent about their data and invest in responsible tools. This would be a significant step forward to building trust and improving their reputation – some of the positive outcomes that surveyed execs said could arise from addressing the protection gap.”

Tech paves a path to closing the protection gap

Surveyed execs were asked to identify the avenues they believe would help their organisations most effectively target the global protection gap. Three of the four most popular methods involve technology, including:

• Using technologies to make insurance products more affordable (48%); 40% of the respondents’ organisations are currently deploying.
• Developing innovative insurance products like parametric or microinsurance (42%); currently in action at 40% of respondents’ organisations.
• Engaging with regulators via insurance organisations (39%); 28% of the respondents’ organisations are currently undertaking.
• Leveraging data to better assess risks and design products (38%); 32% of the respondents’ organisations are working on.

“The future belongs to those who harness innovation – AI, data and emerging frontier technologies – to make insurance not just more accessible but more equitable,” added VanderLinden. “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. 

About Economist Impact

Economist Impact combines the rigor of a think-tank with the creativity of a media brand to engage a globally influential audience. We partner with corporations, foundations, NGOs and governments across big themes including sustainability, health and the changing shape of globalisation to catalyse change and enable progress.  

We bring a 75-year track record of evidence-based policy research across 205 countries. Our global team sheds light on policy choices through benchmarks, economic and social impact analysis, white papers, forecasting and scenario modelling. 

The study's data dashboard allows users to filter findings by region, country, sub-sector and more.