IBC Responds to GFIA Report on Global Protection Gaps

Report highlights urgent need for governments to address growing protection gap for natural catastrophes and cyber crime

Toronto, ON (Mar. 14, 2023) – A new report released by the Global Federation of Insurance Associations (GFIA) underscores the need for governments and the private sector to collaborate more closely to address threats posed to the well-being and economic prosperity of Canadians by natural catastrophes. GFIA, which represents over 40 insurance associations worldwide and is based in Brussels, Belgium, highlights a number of policy recommendations in this report, urging all orders of government to create environments where climate and cyber risks can be managed and mitigated.

“Today’s report is a global call to action for national and subnational governments to finally improve Canada’s preparedness for and resilience to severe weather and cyber events,” said Craig Stewart, Vice-President, Climate Change and Federal Issues, Insurance Bureau of Canada (IBC). “Prudent policy actions can ensure Canadian households and businesses are better informed about and protected against these threats. Specific to Canada, the soon-to-be-released federal budget includes an opportunity to address a major protection gap in this country by announcing a national public-private partnership that provides flood insurance to highly vulnerable Canadians. The policy work is complete. It’s now time for investment and implementation.”

Building on the approach taken in other industrialized nations, Canada’s insurers have provided the federal government with a proposal to create a national flood insurance program. This program would ensure Canadians living in areas at high risk of flooding would have access to the enhanced financial protection that insurance provides and allow for a quicker and more holistic recovery.

In addition, IBC is emphasizing GFIA’s recommendations to address the protection gap for cyber risk, including incentivizing and supporting the prevention of cyber attacks, conducting awareness campaigns, developing incident-reporting frameworks and fostering adaptation measures. GFIA estimates that there is a $900 billion cyber protection gap globally, with the economic impacts of cyber incidents being at least $1 trillion. The GFIA report used IBC’s Cyber Savvy campaign as an example of how public and private players can educate the public, especially small and medium-sized businesses, on cyber threats and the importance of cyber insurance.

In the natural catastrophe section of its report, GFIA recommends actions to address the protection gap – the difference between comprehensive financial protection and actual insurance coverage – for natural catastrophes by implementing prevention and adaptation measures, such as improved land-use planning and building codes, and incentives to relocate or rebuild away from high-risk areas.

As well, GFIA recommends that policy levers include government-backed insurance programs, public-private partnerships, mandatory contributions to natural disaster funds or pooling solutions to alleviate the financial burden on governments and speed up economic recovery from these events by, for instance, increasing take-up of insurance.

As announced by IBC earlier this year, insured damage caused by extreme weather and natural disasters surpassed $3.1 billion in 2022 – the third-worst year on record in Canada’s history. Average annual insured losses from natural catastrophes have grown 164% in the last decade – from $959 million between 2003 and 2012 to $2.53 billion between 2013 and 2022. In addition, the federal government’s budgeted payments to the provinces for recovery assistance after natural disasters has grown an alarming 466%, from $305 million in 2004–2005 to nearly $1.73 billion in 2023–2024.

About Insurance Bureau of Canada

Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up the vast majority of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

For more information, visit www.ibc.ca. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.

Source: Insurance Bureau of Canada (IBC)

Backgrounder:

Global protection gaps and recommendations for bridging them

Ottawa, ON (Mar. 14, 2023) – As we live through times of change and uncertainty — implying higher levels of risk — individuals and organizations worldwide are increasingly experiencing situations in which their health, wealth and income are not adequately protected.

The direct consequences of gaps in protection represent a major challenge for the well-being and economic prosperity of both individuals and societies.

GFIA has produced this report to promote greater understanding of the largest protection gaps faced by individuals, businesses and societies globally. The report examines the drivers of the most relevant protection gaps and provides an overview of the wide range of potential levers that could help reduce each of the gaps. Some levers are illustrated with case studies.

The report contains GFIA’s recommendations to policymakers of the actions that can have the largest potential impact on global protection gaps.

Insurers play an important role in protecting people against the many risks in their lives by providing risk-transfer solutions and ensuring financial stability if the risks materialise. However, insurers alone cannot address all protection gaps. Public stakeholders have a vital role to play.

“Closing the gaps will require action from policymakers to create environments in which risks can be managed and mitigated,” said Susan Neely, President, GFIA. “These actions will help keep risks insurable and insurance protection affordable.”

Please click here to download the report or learn more about the members of the GFIA Protection Gap Taskforce.

About GFIA

GFIA is a non-profit association established to represent national and regional insurance associations that serve the general interests of life, health, general insurance and reinsurance companies worldwide. Established in Washington, DC, in 2012, GFIA is composed of 40 member associations and represents the interests of insurers and reinsurers in 67 countries. These companies account for nearly 90% of total insurance premiums worldwide. GFIA is incorporated in Switzerland and its secretariat is based in Brussels.. For more information, please visit gfiainsurance.org.

Source: Global Federation of Insurance Associations (GFIA)