Protection gaps are expected to worsen across all lines of the insurance business through 2030 as insurers worldwide contend with unsustainable rate-driven growth, according to new research released today by global consultancy firm Bain & Company.

The report, “Bridging the Protection Gap: Affordability, Access, and Risk Prevention,” highlights challenges facing the insurance industry in matching price-to-risk profitably. The result of emerging risks, such as the rise in natural disasters and cyberattacks, property premium affordability, and the declining relevance of life insurance, especially among younger generations.

Only one-quarter to one-third of damage from natural disasters will be covered by insurance by 2030; for mortality, it could be less than half, Bain found.

“Bolstered by unsustainable tailwinds, insurance companies find themselves at an inflection point,” said Sean O’Neill, head of Bain’s global Insurance practice. “Over the past couple of years, we’ve seen rate increases in the property and casualty sector and interest-rate–driven annuity sales in the life sector. While capital and balance sheets remain reasonably strong, several challenges have emerged, and profitability has come under pressure for many lines of the insurance business. Insurers will need to be proactive and act now if they wish to navigate these impacts.”

Investors remain skeptical of U.S. insurers’ prospects for future growth but are more bullish on life insurers in emerging markets, the report stated.

U.S. life insurers’ valuations include negative “white space” from long-term earnings growth, suggesting declining profitability or hidden losses yet to emerge from today’s in-force blocks.

P&C insurers face the same problem, albeit on a smaller scale, due to concerns around the sustainability of recent price increases alongside potentially increasing claims, according to the report.

Another challenge facing insurers worldwide is the increased threat of cyber risk.

Costs from global ransomware damage are expected to climb to more than $250 billion within the next six years, and actions by individual carriers will not be sufficient to address future risks, Bain warned.

“Throughout the insurance sector, risk prevention is an increasingly critical component of strategy,” said Andrew Schwedel, a partner in Bain’s Insurance practice. “Risks for catastrophic cyber events will need to be shared, and public-private partnerships will need to expand to promote prevention. Risk-sharing will also likely require additional capacity from excess and surplus carriers, reinsurers, and alternative capital providers.”

Though challenging, rapidly evolving technology presents new opportunities for insurers.

The proliferation of unstructured data and the rise of AI are reshaping the industry landscape, the report found.

Harnessing data presents insurers with a unique opportunity to enhance affordability and access.

Bain anticipates that AI-driven industry improvements will allow insurers to realize a 10–15 percent revenue uplift, up to 30 percent operating expense savings, and a 30–50 percent reduction in P&C leakage (losses due to errors, inefficiencies or fraud in claims handling).