This document synthesizes key findings from the Global Federation of Insurance Associations (GFIA) October 2025 report, "Pathways to protection: from challenges to opportunities in insurability." It is designed to provide risk managers with a comprehensive overview of the evolving risk landscape, the primary barriers to insurance coverage, and the strategic responses being deployed by the industry and advocated for at the policy level. The analysis is structured around the "4 A's" framework: Awareness, Accessibility, Affordability, and Availability.

The Evolving Global Risk Landscape

The environment for insurability is under increasing pressure from a confluence of escalating risks. The GFIA report identifies several key drivers creating significant challenges for both the Property & Casualty (P&C) and Life insurance sectors.

Key Drivers of Risk:

• Geopolitical and Economic Instability: Rising trade conflicts, sanctions, and unpredictable economic events are creating volatility in financial markets, disrupting supply chains, and adding complexity to underwriting and risk pricing.
• Natural Catastrophes (NatCat): The frequency and severity of natural disasters are increasing, driving up claims costs and premium levels, particularly in property insurance. The report notes that natcat losses have grown by an average of 5% annually over the past 50 years.
• Cyber Threats: The frequency and sophistication of cyberattacks are growing, with ransomware payments doubling from 2022 to 2023. This creates a significant protection gap, as a large majority of businesses feel inadequately protected.
• Technological Shifts: New technologies like electric vehicles (EVs) and semi‑autonomous systems introduce novel risks related to repair costs and battery performance, complicating traditional underwriting models.
• Inflation and Cost Pressures: Persistent inflation in claims costs, particularly for motor, health, and property, is a primary driver of rising premiums.

These factors have contributed to a global protection gap that reached a new high of $1.83 trillion in premium equivalent terms in 2023.

Key Market Statistics and Trends

The "4 A's" Framework: A Comprehensive Analysis of Insurability Barriers

The GFIA report utilizes the "4 A's" framework to dissect the multifaceted challenges to closing the protection gap.

1. Awareness

Awareness involves the recognition of risks and the understanding of how insurance provides financial protection. Key challenges include:

• Low Financial Literacy: A persistent knowledge gap prevents individuals and businesses from obtaining adequate coverage. This is particularly acute for complex products like life savings insurance and pensions.
• Risk Perception and Moral Hazard: Individuals may incorrectly assume that governments will fully compensate them for losses after a natural catastrophe, reducing the perceived need for private insurance and placing long‑term fiscal pressure on public funds.
• Trust Deficit: Consumers may view insurers as more profit‑driven than customer‑centric. The report also highlights that government actions, such as promoting development in high‑risk areas or underfunding state insurance schemes, can undermine the stability of the insurance market and erode trust.

Important Quote: "If a consumer has the power of knowledge, it will directly affect their decisions on what car or home they purchase, and empower them to make more educated choices, thereby mitigating risk."

2. Accessibility

Accessibility concerns the ease with which consumers can purchase and use insurance products. Primary barriers are:

• Distribution and Infrastructure: In rural or remote areas, traditional agent networks are often limited. In developing economies, a lack of distribution networks and insufficient financial infrastructure can severely limit market penetration.
• Legacy Systems: Insurers' reliance on legacy IT systems can create hurdles to modernization, slowing the adoption of digital platforms and flexible product offerings that meet evolving consumer demands.
• Regulatory and Legislative Barriers: Restrictions on who can sell insurance, how products can be bundled, and limitations on cross‑border reinsurance can hinder innovation and limit the capacity to expand coverage.

3. Affordability

Affordability is a critical challenge, especially as premiums rise in response to external pressures. Key drivers include:

• External Cost Pressures: Rising premiums are driven by factors largely outside insurers' direct control, including inflation, supply chain disruptions that prolong repair times, and increased litigation costs.
• Government Taxes and Levies: Taxes on insurance products are a significant component of final cost. The report states that "Taxation is the second‑largest component of insurance premiums after peril‑related risk." In some jurisdictions like Australia, removing state‑based taxes could reduce premiums by 10‑40%.
• Regulatory Hurdles for Innovation: Evolving regulatory frameworks, particularly around new technologies like AI, can hinder insurers' ability to leverage innovations such as parametric models or usage‑based pricing, which have the potential to lower costs.

4. Availability

Availability refers to whether suitable insurance products exist for the risks individuals and businesses face. This is increasingly a concern in high‑risk markets.

• Increased Frequency and Severity of Risks: For certain perils like extreme weather events and systemic cyber risks, the level of uncertainty and potential for loss challenges traditional insurance models, leading to fewer coverage options.
• Impact of Government Actions: Government policies such as rate suppression, increased coverage mandates, and underfunded state insurance programs can turn affordability challenges into availability crises. When insurers cannot price risk accurately, they may be forced to exit certain markets, leaving consumers with limited or no private coverage options and increasing reliance on residual markets like FAIR plans.

Important Quote: "While some risks may no longer be insurable under previous conditions, the industry is actively adapting and innovating to meet evolving needs."

Industry Initiatives and Innovative Responses

The report highlights numerous industry‑led initiatives designed to address the 4 A's, demonstrating a proactive approach to closing protection gaps.

Key Policy Recommendations for a Sustainable Insurance Market

The GFIA report emphasizes that industry innovation alone is insufficient. An enabling policy and regulatory environment is critical. The report provides targeted recommendations for policymakers:

To Enhance Awareness

• Promote public education campaigns on risk exposure (especially climate and cyber).
• Develop pension tracking systems and dashboards to improve retirement planning.
• Utilize tax incentives to encourage a culture of risk protection.
• Support legal frameworks for automatic enrollment in pension schemes.

To Improve Accessibility

• Establish regulatory sandboxes to test innovative insurance models and technologies.
• Support the digitalization of insurance services to improve reach in remote regions.
• Ensure fair access to data to enable the design of customized products.
• Avoid measures that restrict consumer access to financial advice.

To Bolster Affordability

• Support open and competitive insurance and reinsurance markets to maximize capital and lower costs.
• Allow private insurers to use risk‑based pricing to ensure premiums accurately reflect risk.
• Refrain from imposing excessive taxes and levies on premiums.
• Ensure post‑disaster government assistance is structured to avoid creating moral hazard.

To Ensure Availability

• Create regulatory environments that support actuarially sound pricing and efficient distribution, allowing for dynamic pricing adjustments.
• Facilitate the sharing of aggregated government data for risk modeling and mitigation.
• Encourage public and private investment in resilient infrastructure.
• Support a competitive reinsurance sector to help insurers diversify catastrophic risks.

Conclusion

The global insurance landscape is at a critical juncture. While rising risks are widening protection gaps, the insurance industry is actively innovating through technology, new product development, and collaborative partnerships. However, the report concludes that long‑term insurability is a shared responsibility. Sustained progress requires a proactive, collaborative approach between insurers, policymakers, and regulators to create an environment that supports risk‑based pricing, encourages mitigation, and allows insurance to fulfill its essential role in fostering economic resilience and societal well‑being.