My key takeaways from the Malaysia Insurance Institute (MII) Talk
Talk Title:
Why most economic and societal losses remain uninsured - A global perspective
on protection gaps, by Dr. Kai-Uwe Schanz (The Geneva Association)
▹Uninsured
losses = risk protection gap
▹Insurance
Protection gap
▹Uninsured
losses as a share of total economic losses. 30% insured globally
▹Historical
data (Natural catastrophe/Nat Cat): 90% of the protection gap is due to natural catastrophe
▹Our
industry is not relevant in the low income and lower-middle-income group for
natural catastrophe
▹Over
the period of 30 years, the high-income group show that they are insured about 70 -
80%
▹Low
income countries show an enormous degree of vulnerability as a result of
underinsurance
▹In
emerging Asia, protection gap exceeds 90% for major perils (storms, floods and
earthquakes)
Forward
looking data
▹World's
biggest economies, US, China, and Japan have the largest expected uninsured
catastrophe risk
▹Philippines
and Taiwan exhibit the largest macro-economic exposure
▹Nat
cat protection gap - 70% globally
▹Cyber
protection gap is even more dramatic than nat cat protection gap. Global cyber
losses are estimated at about usd500bn per annum which is 4x bigger than Nat
cat. 1 per million total insurance globally
▹10
- 15 years we can become irrelevant if we are not concerned about cyber insurance.
We need to secure our relevance to the digital society
▹The world spent 8
trillion USD on healthcare. Surging expenses as a root cause
driven by medical inflation, expanding treatment options and higher customer
expectations. The growth is higher than economic growth. Upper middle-income country (Malaysia)
▹Healthcare
- personalised business/service
▹Health
protection gap - cost drivers
▹Demography
- aging (end of life morbidity)
▹Income
- driving demand in healthcare expenses
▹Technology
- make healthcare more efficient
▹Productivity
- wage is higher than productivity
▹Policy
- funding mix in different countries
▹Healthcare
financing systems
1.
General taxation
2.
Social insurance
3.
Private health insurance
4.
Out of pocket expenditure (self-financing)
▹Health
protection gap = stressful self-financing costs + estimated non-treatment costs
due to unaffordability. This causes an estimated size of USD 1.4 trillion for emerging
Asia. More than 8% of the regional GDP. For Malaysia, it is assumed 50% out of
pocket is stressful
▹Technology
adds the appeal and help in Healthcare, health insurance sector
▹Protection
gaps are a serious threat to economic growth. Governments play a bigger role in
addressing the gaps. Insurers need to improve service quality, customer
experience, and product innovation and improve awareness of building
▹Medical
inflation and aging populations add to coverage gaps
▹Root
causes - awareness matters more than affordability. Technology is seen as the most
effective remedy to protection gaps
▹Root
causes - Supply, not enough supply of insurance. If no excess income, tough to
buy insurance. Demand - Triple-A, Awareness, Affordability, Appeal
▹We
are business of trust, promises
▹Why
people don't want to buy insurance?
1.
Misunderstanding - do not communicate in a consumer-friendly way
2.
Distrust - push products that customer do not need
3.
Uncertainty - cannot be protected against everything
▹Findings
from online interviews
Less
than 30% of those who own insurance policy feel secured and protected and more
than 50% had a bad experience with an insurer
▹Key
obstacles to further sales
1.
Trust
2.
Understanding of products
3.
Transparency/communication of the industry
4.
Cost
▹Insurance protection gap is tough to be measured. General protection gap can be measured
and help insurers to mitigate risks
▹Key
challenge - make insurance an affordable, appealing and well-understood tool to
relieve society from severe financial hardship
▹Healthcare
and cyber protection gaps are under-researched. Narrowing these gaps is
imperative to maintain the industry's relevance
Lifelong student,
Sofia
0 Comments