Skip to main content
The Actuary: The magazine of the Institute and Faculty of Actuaries - return to the homepage Logo of The Actuary website
  • Search
  • Visit The Actuary Magazine on Facebook
  • Visit The Actuary Magazine on LinkedIn
  • Visit @TheActuaryMag on Twitter
Visit the website of the Institute and Faculty of Actuaries Logo of the Institute and Faculty of Actuaries

Main navigation

  • News
  • Features
    • General Features
    • Interviews
    • Students
    • Opinion
  • Topics
  • Knowledge
    • Business Skills
    • Careers
    • Events
    • Predictions by The Actuary
    • Whitepapers
    • Moody's - Climate Risk Insurers series
    • Webinars
    • Podcasts
  • Jobs
  • IFoA
    • CEO Comment
    • IFoA News
    • People & Social News
    • President Comment
  • Archive
Quick links:
  • Home
  • The Actuary Issues
  • November 2012
11

High growth countries face $168bn 'insurance deficit', says Lloyd's

Open-access content Tuesday 27th November 2012 — updated 9.24am, Tuesday 5th May 2020

Low levels of insurance take-up in fast developing economies mean governments are being left over-exposed to the cost of natural catastrophes, Lloyd's of London said today.

The insurance market's Global underinsurance report identifies 17 countries as being 'underinsured' - where the penetration of non-life insurance was found to be below the minimum required for a country with their income level to be considered adequately insured.

These included some of the largest emerging economies, such as Brazil, China, Nigeria and Turkey. Underinsurance in China accounted for $79.57bn - almost half of the $168.11bn total shortfall in non-life insurance premiums identified by the research, which was carried out by the Centre for Economics & Business Research on Lloyd's behalf. Of the 17 countries, eight were located in Asia, with Bangladesh by far the most uninsured.

Five of the eight countries identified as being most at risk of economic losses from natural catastrophe were among the 10 nations with the lowest levels insurance market penetration, the research also found. These were Bangladesh, China, Vietnam, Indonesia and Turkey.

Lloyd's cited the example of China's Sichuan earthquake as evidence of how low insurance penetration left the state to cover the cost of catastrophes. The 2008 earthquake resulted in estimated damages of $125bn, but just 0.3% of this was covered by insurance.

Increasing insurance market penetration by 1% can reduce state liability for meeting the cost of a catastrophe by 22%, it said.

Richard Ward, chief executive of Lloyd's, said: 'Too many high-growth countries are failing to take the steps required to prepare properly for these sorts of events, leaving people and businesses exposed.

'As high-growth economies continue to develop and supply chains become increasingly interconnected, now is the time to ask ourselves: can the world afford to keep taking such a big risk?'

Douglas McWilliams, founder and chief executive of CEBR, said: 'This insurance gap has a huge and lasting impact on the ability of businesses, governments and people to recover from the earthquakes, hurricanes, flooding and forest fires that affect us all every year. This means lost orders, lost jobs and wasted taxpayer money as a failure to prepare ahead of such events creates costs that are more severe and unmanageable.'

Lloyd's called on businesses to take a more long-term view on insurance issues by making risk management a board-level issue and planning better to protect supply chains and absorb shocks.

Governments should invest more in mitigation measures such as flood barriers to minimise the damage done by natural catastrophes, while also taking steps to open up their economies to insurers.

The insurance industry should also do more to understand the nature of risk in high-growth economies so it can develop products and models for clients in countries where the problem of underinsurance is most severe, it added.

This article appeared in our November 2012 issue of The Actuary.
Click here to view this issue
Filed in
11
Topics
Reinsurance

You might also like...

Share
  • Twitter
  • Facebook
  • Linked in
  • Mail
  • Print

Latest Jobs

Catastrophe Modelling Analyst - London Market Broker

London, England
£40000 - £50000 per annum
Reference
145925

Senior Catastrophe Analyst

England, London
£65000 - £75000 per annum
Reference
145924

Life Actuary - Financial Reporting - Day Rate contract

Negotiable
Reference
145923
See all jobs »
 
 

Today's top reads

 
 

Sign up to our newsletter

News, jobs and updates

Sign up

Subscribe to The Actuary

Receive the print edition straight to your door

Subscribe
Spread-iPad-slantB-june.png

Topics

  • Data Science
  • Investment
  • Risk & ERM
  • Pensions
  • Environment
  • Soft skills
  • General Insurance
  • Regulation Standards
  • Health care
  • Technology
  • Reinsurance
  • Global
  • Life insurance
​
FOLLOW US
The Actuary on LinkedIn
@TheActuaryMag on Twitter
Facebook: The Actuary Magazine
CONTACT US
The Actuary
Tel: (+44) 020 7880 6200
​

IFoA

About IFoA
Become an actuary
IFoA Events
About membership

Information

Privacy Policy
Terms & Conditions
Cookie Policy
Think Green

Get in touch

Contact us
Advertise with us
Subscribe to The Actuary Magazine
Contribute

The Actuary Jobs

Actuarial job search
Pensions jobs
General insurance jobs
Solvency II jobs

© 2023 The Actuary. The Actuary is published on behalf of the Institute and Faculty of Actuaries by Redactive Publishing Limited. All rights reserved. Reproduction of any part is not allowed without written permission.

Redactive Media Group Ltd, 71-75 Shelton Street, London WC2H 9JQ