Insurance Sector Faces Widening Protection Gaps and Emerging Risks

A Bain & Company report highlights growing protection gaps across insurance lines, predicting only a fraction of natural disaster damages and mortality risks will be covered by 2030, while cyber threats pose additional challenges.

Bain & Company has released a new report revealing that protection gaps are set to expand throughout the global insurance industry until 2030. These gaps, defined as the difference between insured and uninsured losses, pose significant challenges due to unsustainable rate-driven growth.

The report emphasizes that only 25-33 percent of natural disaster damages and less than half of mortality risks are expected to be insured by the decade's end. Rising threats such as natural disasters, cyberattacks, and high property premiums are major contributors to these widening gaps.

Sean O'Neill, head of Bain's Global Insurance practice, states that the industry is at a critical juncture. Insurance firms must proactively address these challenges, including the escalating costs from global ransomware attacks projected to exceed USD 250 billion in the next six years. Furthermore, AI-driven advancements present opportunities for significant revenue growth and cost savings in the sector.

(With inputs from agencies.)