While closing the global protection gap offers huge potential for the re/insurance industry to grow its premium base, Swiss Re is focused primarily on the value of building resilience at both the individual and societal level, according to Moses Ojeisekhoba, the company’s CEO of Reinsurance.
Speaking during a lecture in the Old Library at Lloyd’s of London this week, Ojeisekhoba noted that the $800 billion shortfall in global insurance coverage is continuing to expand as economic losses accelerate.
Narrowing the gap will thus require a radical rethinking of the way re/insurers develop and market their products, he told attendees, as well as a stronger partnerships with governments and multilateral organisations, and integration of new technologies.
“I think the gap itself has significant ramifications for society as a whole as it relates to resilience,” Ojeisekhoba told the audience at Lloyd’s. “We talk about an industry that exists to support people, but the gap itself continues to grow.”
“And why it’s important to close it from our perspective is this issue of how we make the world itself much more resilient at the individual level, at the level of companies, and at the level of societies.”
He added that this focus means implementing solutions in vulnerable areas even when Swiss Re does not expect to make any return.
“Some of the solutions we put in place, we put in place not expecting a return at all, it’s just this is part of what we believe in very strongly as part of our purpose,” he continued.
“In other areas it’ll clearly depend on which country it is, and the expectation is that you can raise a return, but we look at these things together to try to figure out how we get traction in a particular country.”
However, closing the protection gap will require a shift in the way that insurance is conceived in emerging nations, as well as a re-evaluation of the needs that it focuses on, Ojeisekhoba said.
“It’s near impossible to address this issue of a gap existing for people if you don’t address the basic needs that people have and if you don’t also address the systemic issues that exist in the structures that we have today,” he explained.
Re/insurers need to provide better access to insurance for the most vulnerable communities and individuals, Ojeisekhoba suggested, as well as improve its affordability and promote education about the benefits of insurance coverage.
“We need to design products that attach to the needs that the individual has at the most basic level,” he said. “The reason most people haven’t bought it is because the design of the products that we have attaches to things that are aspirational for them, rather than where they are today and meeting needs that they have today.”
Highlighting key way to address this challenge, Ojeisekhoba pointed to closer partnerships with governments and the implementation of new technologies.
“The easiest way to get to the largest population in most of these countries is through working together with governments,” he told the Lloyd’s audience, noting that Swiss Re is working with governments across Africa, South East Asia and Latin America to encourage insurance take-up.
Technology also presents a major opportunity to raise product awareness, increase distribution and improve coverage through more granular pricing and atomisation of risk, Ojeisekhoba explained.
“Our view at Swiss Re is that technology plays a significant role,” he said. “Not the only answer, but one significant path that we can address the series of issues that were defined.”