Households and businesses face a $500 billion global property and mortality protection gap, according to Swiss Re’s latest sigma study.

Swiss Re’s report said that the figure illustrates increasing risk vulnerabilities emerging around the world but also presents an opportunity for carriers.

“The gap represents the still elevated vulnerability to adverse events for many households and businesses across the world and the very large opportunity for insurers to further contribute to improving resilience,” Swiss Re said.

To improve resilience, particularly 10 years after the global economic collapse, Swiss Re said that private capital market products could, in part, play a role. This would be balanced out by the public sector establishing financial market standards, when possible or appropriate, in areas such as sustainable and infrastructure investments.

Beyond that, however, insurance is a core element of resilience, and Swiss Re argues that public policy can help carriers expand their ability to both absorb risk and increase resilience in building projects and infrastructure.

The insurance sector has $30 trillion in total assets under management, according to statistics cited by Swiss Re, which it said can be put into play as “a risk absorber.”

Another factor Swiss Re said can help narrow protection gaps: innovation. The reinsurer said that innovations such as parametric insurance could broaden what is insurable for natural catastrophe risks that have been previously hard to cover, thanks to technology advances.

Double-trigger indemnity structures and data/modeling advances will also help insurers develop innovative coverage for exposures such as business interruption, cyber, product recall and weather/energy price risks, Swiss Re said.

The full Swiss Re sigma study is called “Global Economic and Insurance Perspectives 2020.”

Source: Swiss Re