The persistent mortality protection gap is a constant reminder of the challenges reinsurers and insurers face in reaching underserved customers.
By making insurance more available, accessible and affordable, our industry has a big opportunity to boost societal resilience.
However, the peace of mind afforded by insurance hasn’t reached everyone.
Swiss Re Institute’s Mortality Resilience Index, published mid-2022, indicated more than 50% of global financial needs remain unprotected in the event of a breadwinner’s death.
Simply put, survivors are left with insufficient resources, exposing them to financial hardship, poverty, or reliance on extended family or community support to pick up the pieces.
Unfortunately, despite our industry’s efforts to address protection gaps, data shows that global mortality resilience has been stagnant over the last two decades.
We need to approach this challenge from a fresh perspective.
The three As: Availability, accessibility and affordability
Swiss Re created the Insurance Inclusion Radar to measure the degree of inclusivity in a selection of 16 life insurance markets on three dimensions of inclusion: availability, accessibility and affordability.
This work pinpointed subtle, sometimes hidden deficits in each market which may detract from levels of insurance inclusion and which have held us back from closing protection gaps.
For starters, we can see that no insurance market is fully inclusive or scores consistently high across all of the 3As.
Whether emerging or advanced, all 16 markets have structural weaknesses that hamper efforts to close the protection gap.
While inclusion is generally higher in advanced markets where life insurance has historically played a more significant role, our assessment shows the typically higher income levels in advanced economies do not inherently translate to higher levels of affordability.
Translate insights into action
By illuminating areas where deficits in availability, accessibility and affordability emerge as barriers for would-be insurance buyers, we can see where efforts to remedy deficits should be focused.
First and foremost, those who share the goal of boosting inclusion should start with market research to better understand consumer needs across all segments of society, particularly in community groups that are often overlooked.
In many instances, there is little to no data available to guide firms, making new research to uncover insights into target customers’ needs, preferences, and behaviours essential.
Strategic partnerships
We also cannot overlook the importance of strategic partnerships to foster diversity as we seek to recast the insurance workforce into one that is more representative of the groups we aim to reach with protection products.
To access new customer segments, firms could look to partner with non-insurance companies – including retail, communication or financial service providers – whose existing relationships with underserved customer groups can serve as a bridge to broadening insurance coverage.
Products must continue to evolve through innovation that reflects changes in society.
Given new and emerging forms of work, efforts to extend group life and health cover to gig workers and buyer groups such as telecom service users represent opportunities to extend insurance reach beyond the traditional employer-employee space.
Underwriting innovation for greater inclusion
Reducing the number of underwriting questions, simplifying the wording, and making effective use of alternative data sources in a way that helps better manage risks and improves underwriting quality can help make the insurance buying process more accessible for all.
Finally, reinsurers and insurers must continue to engage in dialogue with regulators to maintain a balance between consumer protection and robust innovation.
Regulatory sandboxes allowing insurers to pilot new concepts are one promising path toward driving inclusive insurance products forward.
At the same time, working with regulators to advance innovations that recognise synergies between social welfare benefits and private risk covers is also an important consideration.