Emerging Markets Face Large Insurance Protection Gaps Amid Growth Potential

A recent study by the Geneva Association highlights that insurance penetration remains limited in emerging economies despite advancements in digital payments and savings products. Large protection gaps are evident, especially within health, disability, savings-type life, and property insurance sectors, where medical costs emerge as a top financial concern for households due to limited social protection and high out-of-pocket expenses. Familiarity and usage of insurance products are most notable in China, India, and South Africa, aided by digital platforms, state-led initiatives, and cultural practices such as funeral policies. The study identifies cost and lack of knowledge as principal barriers to insurance adoption, with borrowing services also underutilized due to mistrust and insufficient credit histories. Many households do not prioritize insurance due to limited understanding of its benefits. Inclusive insurance solutions are recognized for their role in helping households manage unexpected shocks like illness and accidents without falling into poverty and in supporting business continuity by mitigating financial risks. Addressing these challenges requires coordinated efforts among commercial innovators, policymakers, and regulators. Commercial strategies include developing simple insurance products, leveraging digital distribution channels, affinity partnerships, and adopting parametric insurance models. Public sector measures such as government subsidies, digital identity systems, and insurance education are crucial to boosting coverage. Regulatory frameworks that facilitate innovation through simplified licensing, digital onboarding processes, and sandbox environments are recommended, provided they uphold consumer protection standards. The report underscores the opportunity for emerging markets to significantly expand insurance coverage by integrating digital technologies, public-private collaborations, and progressive regulatory policies. The Geneva Association's analysis encompasses seven countries: Brazil, China, India, Mexico, Morocco, South Africa, and Türkiye, revealing that over 1.3 billion adults globally remain excluded from formal financial services. This gap highlights a substantial opportunity for growth in inclusive insurance that can support financial resilience and economic development.