The International Association of Insurance Supervisors has called for action to address gaps in natural catastrophe insurance coverage, warning of increased financial risks if the issue is not addressed.  

In a special topic edition of its Global Insurance Market Report, it notes the “far-reaching” economic consequences of catastrophes by examining six case studies across low- and high-income nations.

The examples are the 2011 Canterbury earthquakes in New Zealand and disasters in Canada, Portugal, Pakistan, Dominica and Malawi.

The association says that, in most cases, it observes a significant impact on agriculture and housing, with more pronounced losses in countries with bigger protection gaps.

It says 57% of global losses last year were uninsured, and if present trends continue, economies – particularly developing ones – will be exposed to greater financial system risks. 

It says uneven access to insurance is driven by unaffordability, uninsurable risk profiles and poor education.

“These findings highlight the profound implications of insurance protection gaps for economies, societies and financial systems,” IAIS secretary general Jonathan Dixon said.

“Without co-ordinated global action, these gaps could evolve into systemic vulnerabilities, potentially threatening financial stability in the most exposed regions.”

The association says it has made “substantial progress” highlighting the role of insurance in addressing protection gaps worldwide.