Insurers Face Crucial Juncture Amid Climate Volatility and Tech Advancements
The insurance industry stands at a critical juncture, grappling with escalating climate volatility, widening socioeconomic gaps, and rapid tech advancements. To thrive, insurers must overcome barriers like limited consumer understanding and trust deficits, while embracing the convergence of artificial intelligence (AI) and data innovation.
The global protection gap, currently estimated at £1.4 trillion, underscores the urgency for change. In 2024 alone, £178 billion in natural disaster losses went uninsured. Climate change is exacerbating this issue, pushing traditional insurance models to their limits.
Insurance leaders, with 79% acknowledging a moral responsibility and 76% seeing it as a significant business opportunity, are eager to close this gap. Andrew Pollard, an Insurance Specialist at Marsh in the United Kingdom and Ireland, is among those driving this change. AI, machine learning, and real-time data analytics can help insurers make insurance more inclusive and close this protection gap. However, insurers must first address barriers such as limited understanding of consumer needs and lack of external insight.
The insurance industry's future depends on its ability to navigate these challenges and embrace innovation. By leveraging AI and data, insurers can make insurance more accessible and inclusive, thereby reducing the protection gap. This not only fulfils a moral responsibility but also presents a significant business opportunity.
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