By 2030, insurance coverage may only account for 25% to 33% of the damages caused by natural disasters, while less than half of mortality risks could be insured, according to a report from Bain & Company.
Sean O’Neill, Bain’s global head of insurance, highlighted that while insurers currently maintain strong balance sheets, they are facing mounting profitability pressures across various business lines.
The report, titled Bridging the Protection Gap: Affordability, Access, and Risk Prevention, also underscores the growing threat of cyber risks. Global ransomware damages are projected to exceed $250 billion within the next six years, presenting another significant challenge for the industry.
Bain’s findings suggest that individual insurers alone cannot address this rising risk, calling for greater public-private partnerships and additional support from reinsurers and alternative capital providers to bridge the protection gap.
Despite these challenges, the report points to opportunities in technology, particularly in artificial intelligence (AI) and unstructured data. These advancements are expected to drive a 10% to 15% increase in insurance revenue, as well as reduce operating expenses by up to 30%. Furthermore, AI and data analysis are anticipated to cut property and casualty leakage by 30% to 50%.
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