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While the demand for comprehensive and personalised insurance products are on the rise, service providers seem less than ready to address the coverage gap in existing policies as well as emerging risks, according to the World Insurance Report 2019.
The report, published by Capgemini and Paris-headquartered Efma, a non-profit organisation, covers all the three broad insurance segments – life, non-life, and health insurance.
The key findings are: insurers have been slow to respond to emerging risks (from cyber security to environmental threats); a significant coverage gap exists in emerging risk areas; consumers are better prepared for change than service providers; and there is a lack of product innovation in the area of emerging threats.
Commenting on the findings, Anirban Bose, CEO (Financial Services), Capgemini, said: “It signals the opportunity for insurers as there is a coverage gap in the areas of emerging risk. Those that can evolve products through technology, collaborate with innovators, and think of themselves as partners and preventers to their customers will stand to benefit.”
Emerging risks
The report has identified five macro trends that create emerging risks for the insured and their businesses – disruptive environmental patterns, technological advancements, evolving socio and demographic trends, new medical and health concerns, and business environment changes.
“Most insurers have been slow to respond to these trends. Less than 25 per cent of business customers across all geographies (the report has covered insights from 28 countries) feel they have sufficient coverage against any one of the emerging risks, driven by the macro trends. Less than 40 per cent of life and health insurers said they have built a pipeline of new products to cover emerging risks comprehensively.”
The slow response has resulted in a huge coverage gap. The report has estimated a whopping 83 per cent of personal insurance customers being exposed to medium- to high-risk and, in many instances, outliving their savings.
Among business customers, 81 per cent were found exposed to escalating employee healthcare costs against 17 per cent who are adequately covered; 87 per cent were at risk of cyber attacks, but less than 18 per cent are comprehensively insured; and almost 75 per cent are under threat of rising natural catastrophes, but only 22 per cent are effectively covered.
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