There is no question that the Covid-19 crisis has forced us to rethink our global capacity to absorb new shocks. Faced with two shocks already in the 21st Century, the global financial crisis in 2007-2008 and the 2019-2020 Covid-19 pandemic, it is clear that at this time one of the important challenges we have is building greater resilience to better manager risks.

In the infographic above, we have summarized The Swiss Re Institute’s Insurance Resilience Index (I-RI) extracted from the report sigma Resilience Index 2020: global resilience put to the pandemic test. This index provides a sense of insurance protection available as a percentage of what is needed. A higher percentage means more resilience. Insurance resilience indices are measured across three core risk areas; health resilience, mortality resilience and natural catastrophe resilience.

The Sigma resilience index compares the insurance resilience index from 2008 (the year of global financial crisis) with 2018 and 2019 in order to provide a directional sense of what 2020 is expected to bring post-COVID.

Form the first looks, we see that the insurance resilience levels are significantly different between advanced and emerging economies. Overall, the resilience is lowest for natural catastrophes. Digging a bit deeper, North America has been the most stable across all these years while mortality resilience has picked up significantly in the Advanced Asia. Among emerging economies, Emerging Asia has the lowest level of overall resilience, however, mortality and health resilience has improved in the last 10 years. Latin America has seen sharp decrease in the natural catastrophe resilience.

Alternatively, the dollar-value of the protection gap provides another way of looking at insurance resilience. This is the difference between the need for insurance and its availability. The overall value of the insurance protection gap has been increasing since the GFC, particularly due to mortality and health protection gaps in emerging economies.

With Covid-19 putting the global insurance protection to a new test, the world’s protection gap is set to widen putting health resilience on the spotlight. Many households continue to grapple with lower incomes, higher healthcare costs and excessive mortality, the health and mortality protection gap is therefore expected to broaden. We will have to wait and see how these numbers change next year and what does it mean for the insurance needs in the coming years.

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