The protection gap is a serious concern for senior insurance executives throughout the Association of Southeast Asian Nations (ASEAN) region, as large uninsured losses adversely affect a country’s fiscal position and ability to recover swiftly, according to a report published by Dr. Schanz, Alms & Company and Malaysian Re.
A lack of awareness surrounding the benefits of insurance, as well as consumer mindset and affordability of cover emerged as some of the main hurdles to closing the gap.
Overall, healthcare was mentioned most frequently as the largest protection gap in ASEAN. Due to rising per capita incomes and customer expectations, in combination with medical inflation and – in some countries – an ageing population, public health schemes reach their limits.
Ranked second were natural disasters, as they are virtually uninsured in some ASEAN countries, with disastrous consequences for public budgets, private savings and business continuity.
Property, especially residential cover, features third, as risk awareness among homeowners remains low.
The ASEAN insurers interviewed for the report hoped for more active role by the public sector.
Subsidised schemes such as agricultural insurance, tax incentives as well as compulsory insurance requirements are among the suggested remedies to narrow protection gaps.
Conversely, insurers acknowledged their own shortcomings, such as the failure to build awareness, both in terms of exposures and available risk solutions, as well as a lack of sufficiently innovative and suitable products.
“To most of the senior executives interviewed non-life protection gaps are a severe threat to their respective countries’ economic growth and societal progress,” said Zainudin Ishak, President and Chief Executive Officer of Malaysian Re.
“To close the gap between economic and insured losses, recommendations range from enhanced public-private partnerships (PPP), the introduction of subsidised schemes, the provision of tax incentives and compulsory insurance requirements to awareness and education campaigns.”