Catastrophe and protection gaps
A protection gap is the share of economic loss that is not insured. It falls on households, firms, lenders and public budgets. This page sets out how The Global Risks Alliance (GRA) researches catastrophe losses and protection gaps: the evidence it uses, the methods it applies and the boundary between research and the insurance market. Findings are listed here as they are released after review. This page belongs to research and intelligence.
- Institution
- The Global Risks Alliance (GRA)
- Service level
- R0: information and enquiries
Fig.How a finding is reviewed before it is published. Design, not a record.
The short answer.
Catastrophe and protection-gap research at GRA studies catastrophe losses and the share of economic loss that is not insured, separating what is measured from what is estimated. It sets out the evidence and methods used and the boundary between research and the insurance market, and lists findings as they are released after review.
Exposure, hazard and the exceedance curve.
Which places drive loss in a severe year, and how far it reaches into reinsurance. Illustrative design values.
Separating what is measured from what is estimated.
| Component | Typical source | Evidence label |
|---|---|---|
| Insured loss | Industry and supervisory statistics | Officially reported or institution-reported |
| Economic loss | Damage assessments and post-event surveys | Estimated |
| Hazard and exposure | Hazard models and asset registers | Modelled |
| Future gap | Scenarios of hazard, exposure and cover | Scenario |
| Unrecorded losses | Often no reliable source | Unknown |
A protection-gap figure is a difference between two quantities with different evidence labels. GRA reports both and never presents the gap as an observation.
What the research measures against.
| Source | Gives | Label |
|---|---|---|
| IAIS Global Insurance Market Report | Sector-wide risk monitoring including natural catastrophe and protection gap analysis | OFFICIAL |
| EIOPA natural catastrophe protection gap dashboard | Country and peril view of insurance protection gaps in Europe | ESTIMATED |
| EM-DAT and DesInventar | Event-level economic loss and impact records | REPORTED |
| Open catastrophe models (Oasis, GEM) | Modelled loss for selected perils and regions | MODELLED |
Keeping measured and modelled gaps apart.
Research reports the gap two ways: event-based, comparing reported economic and insured loss after an event, and model-based, comparing modelled average annual loss with insured exposure. The two answer different questions and are never blended. Hazard modelling evidence comes from GCRI Climate and Hazards; loss accounting from GCRI disaster loss accounting.
How the research is built.
- 01
Tail modelling
Rare, severe losses are analysed with extreme value methods. Reference: extreme value theory and tail risk.
- 02
Exposure mapping
Assets, people and activities placed against hazard footprints, with gaps in the asset register stated.
- 03
Why cover is missing
Affordability, availability, awareness and data are examined separately, because each implies different questions.
- 04
Who bears the loss
Uninsured loss is traced to households, firms, lenders and public budgets. See sovereign and public financial risk.
Research ends where the insurance market begins.
Evidence and questions
Describes exposure, existing cover, data gaps and the questions an insurer or public authority would need to answer.
Market activity
Underwrites, prices, sells, solicits, places or brokers cover, or recommends an insurer, reinsurer or product.
Where this research is used.
Research informs GRA's designed readiness services on protection gaps and insurance readiness, the sector community on Insurance Nexus and the proposed Reinsurance and Catastrophe community, which is in development. Hazard science comes from The Global Centre for Risk and Innovation (GCRI), including its climate and hazards work. Related research: financial stability analysis.
Terms used on this page.
Each term as this page uses it. Where a standard-setting body defines the term, the wording follows that body.
| Term | Definition |
|---|---|
| Insurance protection gap | The difference between economic losses and insured losses, for an event, a year or an expected annual figure. |
| Catastrophe model | Software that combines hazard, exposure and vulnerability modules to simulate many possible events and estimate the distribution of insured loss. |
| Industry loss estimate | A reporting agency's estimate of total insured losses from an event across the market. |
| Average annual loss | The expected insured loss per year from a peril, averaged over all simulated years of a catastrophe model. |
Where this page's references lead.
The bodies and documents this page is read against. Status and editions change; each link goes to the issuing body.
Questions and answers.
Does GRA publish protection-gap figures for countries?
Can insurers use GRA research to price policies?
Why not use catastrophe model vendors' figures directly?
Where do I send evidence or a correction?
Around GRA.
Start with an enquiry.
The current service level is R0: information and enquiries. An enquiry receives a reference and names the next step; applications, payments, compute allocations and registrations open only when their team, terms and review capacity exist.