Global insurance gap report highlights local issues

A new report from the Global Federation of Insurance Associations has identified and quantified the most significant, and growing, annual global insurance protection gaps, two of which are of particular concern for Aotearoa New Zealand in the area of general insurance, says the Insurance Council of NZ.

The report, Global Protection Gaps and Recommendations for Bridging Them, highlights global shortfalls in general insurance cover of around US$900 billion for cyber risks and around US$100 billion for natural disasters.

GFIA Vice President and Insurance Council of New Zealand chief executive Tim Grafton says, in a statement, that these are two particular areas of concern for Aotearoa New Zealand.

He says cyber security is often poorly understood and inadequately implemented outside of providers of crucial physical and economic infrastructure.

Grafton says it’s a particular issue for an economy like NZ that is characterised with a very large proportion of SMEs “which can lack the capacity to deal with the issue”.

“Education is essential, as too are incentives, including in the form of premium discounts for taking sensible steps to reduce the risks.”

Natural disaster insurance protection is clearly very topical in Aotearoa right now.

Grafton says the issue we face is one of protecting our position as a global leader in this area.

“Central to preserving this is getting much smarter about where we build and maintain our homes, businesses and infrastructure, while taking action to reduce risks so that insurance can remain both available and relatively affordable, on an all-risks basis, to property owners and insurers alike. What we mustn’t do is subsidise people to stay in harm’s way.”

GFIA president, Susan Neely, says that insurers around the world play a vital role in helping to protect people and businesses from the risks they face, and to recover when those risks materialise.

“ However, as this report highlights, a range of factors have led to huge and growing global protection gaps that could have profound impacts on people’s lives and livelihoods.

“Insurers can, and are, taking steps to address these gaps. These include using technology to assess risks and claims, and to make insurance more accessible for people and businesses. However, closing the gaps will also require action from policymakers to create environments in which risks can be managed and mitigated,” she says.

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