Contribution to in the Insurance Forum Booklet.
Session Moderator: Dr. Astrid Zwick, InsuResilience Global Partnership
The role of insurance in global policy discussions
Insurance can play a key role for economic growth with its risk carrier capacity and as large institutional investor. Impacts of natural disasters for example may cause significant reductions in national GDP deviating budget for economic growth to recovery. While in high-income countries almost half of all economic losses from disasters are covered by insurance, less than 5% of losses are covered in poorer countries, with the poorest people suffering the largest “protection gap”. Risk transfer can be cost-effective and efficient, it incentivises risk management and adaptation efforts – especially effective in combination with preparedness, early warning systems, risk reduction, safety nets, response, recovery.
Highlights from the session
The distinctive session panelists agreed that with increasing longevity and disaster risks, the protection gap is a growing challenge that must be addressed. The role of supervisors in the promotion of fair, safe and stable insurance markets for the benefit and protection of policyholders is crucial and proportionate and appropriate approaches for access to insurance for the millions of unprotected individuals and business are needed. Further recommendations for example covered holistic risk management, an accessible data repository and the benefit of Public Private Partnerships. Reinsurance was emphasised due to its solvency capacity and panelists considered a broad education of consumers in financial literacy and risk awareness as a key topic. It was consensus that especially in low- and mid-income countries the definition of appropriate regulation for microinsurance and its integration into regulatory processes as well as incentivising the design of products for low-income people can contribute to close the protection gap.
The Insurance Forum as a precedent for the future
Recognising the crucial role that insurance can play in building resilient economies and promoting sustainable economic development, such a forum could be taken up by other jurisdictions in an effort to position Insurance Supervision and the Insurance Industry as a crucial contributor to global discussions.
Highlight about the Insurance Forum
The Argentine Superintendency took leadership in highlighting the crucial role of insurance as part of the G20 Presidency. A key takeaway was the value of on-going engagement and discussion at a global level on economic resilience, infrastructure investment and innovation.