Protection gaps
Promoting access to and affordability of insurance has been a priority topic for the IAIS since the adoption of the access agenda in 2006 – see also our dedicated page on financial inclusion. Over the past few years, the IAIS also extended its work on developing the role that supervisors can play in addressing protection gaps, collaborating with partners to develop supporting materials focused on pandemic and natural catastrophe protection gaps.
At its essence, insurance exists to build societal resilience by offering risk management, pooling and diversification of risk and mitigation of adversities. Insurance needs to deliver on this purpose, especially for vulnerable elements of society, through inclusive insurance markets characterised by product design, distribution and servicing which meets consumers’ needs, addresses protection gaps and treats customers fairly.
Therefore, the current IAIS Strategic Plan includes a strategic theme of “Supporting insurance to serve its societal purpose of building resilience”. Our work on protection gaps feeds into this theme.
IAIS work on NatCat protection gaps
The current focus of the IAIS related to protection gaps is on natural catastrophes (NatCat). Increasing damage and economic losses from NatCat events are widening protection gaps and could have potential systemic ramification by causing strain on economies and government budgets.
Insurance, including reinsurance, should be a key element of comprehensive disaster risk financing strategies in managing the physical risk and financial impacts of NatCat events, supporting recovery efforts, and promoting resilience.
Collaborative work
Given the cross-cutting nature of protection gaps, a comprehensive risk management approach involving diverse stakeholders is essential to reduce economic losses and promote sustainable insurance-based solutions. To this end, the IAIS is actively working with partners to develop guiding materials that foster multi-stakeholder collaboration in addressing protection gaps. In the context of NatCat protection gap, these partners include the FSI, G7, G20, OECD, and the World Bank Group.
Financial stability
The IAIS, with the support of its members, conducts its own analysis of NatCat protection gaps, focusing particularly on potential financial stability implications. In the 2023 and 2024 GIMAR climate chapters, the IAIS has respectively analysed how severe NatCat scenarios could significantly affect insurers’ capital, and the considerable variability in NatCat exposure across countries, including the varying effects of climate change on these exposures.
In 2025, the GIMAR special topic edition will focus on the potential financial stability implications of NatCat protection gaps. The publication will include a theoretical description of the issue, its relevance for financial stability and case study analysis of the transmission channels.
Recent and upcoming events
- 8-10 July 2025, IAIS Global Seminar 2025. On 10th July, there will be a panel session on natural catastrophe protection gaps. Registration link.
- December 2024, IAIS Annual Conference (2024) — Societal role of insurance.
Related
documents
Capacity building
Natural Catastrophes Assessment Tool
To help supervisors assess the potential materiality of NatCat risks and how climate change may impact them, the IAIS commissioned CLIMADA Technologies to develop a tool based on CLIMADA, an open source global NatCat model covering the key climate-related insurance NatCat perils. This tool provides IAIS members with estimates of the NatCat damages at different return periods at a country and US state level, as well as average annual loss (AAL) across more than 250 individual territories using the LitPop global high-resolution asset exposure dataset. In addition, the tool provides estimates about how climate change may impact the above metrics by 2030, 2050 and 2080 under Representative Concentration Pathways (RCP) 8.5 (the pathway with the highest assumed greenhouse gas emissions) and based on unchanged exposure.
IAIS members have free and unlimited access to the tool and are encouraged to reach out to Miroslav Petkov for further information.