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Swiss Re: ASIA-PACIFIC MORTALITY PROTECTION GAP – THE TIME FOR ACTION IS NOW


Asia-Pacific Mortality Protection Gap – the time for action is now


A new study published by Swiss Re in Asia-Pacific quantifies the total mortality protection gap across 12 insurance markets to be USD 41 trillion. 

Paul Turner, Swiss Re’s Head of Client Management, Reinsurance Client Markets, Division Globals, and David Alexander, Swiss Re’s Head of Business Development Asia, joint authors of the report, highlight some key findings.

Despite numerous industry studies and awareness campaigns, there is still a significant mortality protection gap in all Asia-Pacific markets. 

Swiss Re’s recently published study, Mortality Protection Gap: Asia-Pacific 2011 – the first to feature multiple Asia-Pacific markets – finds that the aggregate mortality protection gap across 12 Asia-Pacific markets expanded significantly from USD 16 trillion in 2000 to USD 41 trillion in 2010 (see figure 1).  

This equates to a massive opportunity for the industry – the mortality protection gap is worth approximately USD 124.2 billion in potential premiums to the industry!

The results of the study pose a number of questions on both the demand and supply sides of life insurance.

Demand side:

  • Does the traditional reliance on support from the extended family in Asia significantly reduce demand for insurance solutions and will this continue to be the case in the future?
  • Will customers in Asia see the value of life insurance without an investment element and buy the required levels of protection?



Supply side:

  •  Is the industry doing enough to articulate the value and cost of life insurance products? Clear messages such as “for less than a cup of coffee per day, you can protect your family” can be very powerful motivators to act.
  •  Do our distribution channels offer the broadest access points to our products?
  • Do we need to “reinvent” medical underwriting to remove sales barriers without compromising prudent risk management standards?
Forty percent (40%) of the respondents to Swiss Re’s "Survey of Risk Appetite and Insurance: Asia-Pacific 2011”1) said their families would or might struggle financially in case of an adverse event such as early death. 

The survey identifies the major barriers to purchasing insurance: 
1) cost and 
2) lack of available funds.
Despite the perception that life insurance is expensive, over half of the survey respondents are willing to pay at or even above the market price for a life insurance product. 

This gap in customer perception is a clear opportunity for the life insurance industry.

In addition to more customer education with regard to the benefits and costs of life insurance products, life insurers are adopting a number of different strategies including:
  • Diversifying distribution channels and aligning channels with customer segments and products: for example, pure protection products such as term life insurance sold via direct marketing channels such as mail, telephone and the Internet.
  • Proactively topping up the coverage of existing customers as they go through life and protection need changes and increases. Direct consumer marketing channels will often complement agency forces in this space.
  • Introducing data analytics to target customers who match certain risk profiles and to significantly reduce the medical underwriting burden.
In general, it is clear that more needs to be done in terms of supporting the general public in life insurance matters. 

The Australian insurance industry has led the way in the region in recent years, working collectively to promote greater awareness of the benefits of life insurance protection to the general public. 

This work, together with an increase in alternative distribution channels and sales of protection through superannuation funds, has helped reduce the protection gap in Australia.

The continuing growth of Asia-Pacific economies will drive the need for life insurance protection. 

Thus, there has never been a better time for insurers to understand our customers’ protection needs, address challenges and work together to capture the opportunities ahead of us.


Between April and May 2011, Swiss Re commissioned a large-scale survey covering 13,800 consumers aged 20 to 40 in Asia-Pacific; the survey aimed to gauge consumer attitudes towards four risk aspects and look into the insurance needs and buying behaviours of target consumers across the region.

Please contact your Swiss Re client manager for further details on our research and solutions relating to the protection gap.

Published September 2011
Source: http://www.swissre.com/reinsurance/insurers/life_health/Mortality_Protection_Gap.html?mobile=iphone



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