The 2015 Global Insurance Forum addressed the topic “Filling the Protection Gap” (1). During the conference, key speakers noted the growing divide between the economic losses societies are facing and the role of the insurance industry. Many (re)insurance leaders believe the industry can play a significant role in a rapidly changing global risk landscape with pre-loss financing solutions designed to spread risk, relieve the burden on public finances and improve the resiliency of communities.
Beyond the (re)insurance sector, others are calling for change as well. The G7 “Leaders Statement” commented on the need for action on climate change: “Urgent and concrete action is needed to address climate change …. Mobilization of private sector capital is also crucial for achieving this commitment and …. building resilience against the effects of climate change …. We will aim to increase by up to 400 million the number of people in the most vulnerable developing countries who have access to direct or indirect insurance coverage against the negative impact of climate change related hazards by 2020 …. To do so we will learn from and build on already existing risk insurance facilities such as …. the Caribbean Catastrophe Risk Insurance Facility (CCRIF) and other efforts to develop insurance solutions and markets in vulnerable regions….” (2)
Innovative risk financing solutions are being delivered that address geo-political and longevity risk as well as risk associated with natural catastrophes. There are growth opportunities for the private sector to be even more innovative in its approaches to engage government entities with appealing products. Creative business models will be required for (re)insurers to have maximum impact in public-private partnerships.
Solutions are being brought to bear that address important needs in both developed and emerging economies. For example the Turkish Catastrophe Insurance Pool, Mexico’s Fund for Natural Disasters and the risk financing solutions being deployed by certain US residual markets are accessing new forms of risk capital to manage the potential devastating impact of natural catastrophe events caused by tropical cyclones and earthquakes. There are a number of initiatives underway to bring more robust risk financing solutions to similar challenges, such as the growing risk presented by flooding in the United Kingdom.
1. International Insurance Society: Global Leadership Panel: Filling the Protection Gap, New York, 2015.
2. US White House: Office of the Press Secretary: G7 Leaders’ Declaration, Schloss Elmau, Germany, June 8, 2015.