Asia-Pacific sees huge increase in mortality protection gap over the past decade to USD 41 trillion in total

08 September 2011, Hong Kong

Swiss Re today published a study, Mortality Protection Gap: Asia-Pacific 2011, which finds that the aggregate mortality protection gap across 12 Asian markets expanded significantly from USD 16 trillion in 2000 to USD 41 trillion in 2010 (see figure 1), representing an average growth of 10% per year. This is the first study of its kind featuring multiple Asia-Pacific markets.

“There is a sizeable mortality protection gap in all the markets covered by our study, particularly in China, Japan, India and South Korea,” says David Alexander, Head of Business Development Asia, Swiss Re.

“Swiss Re believes that the family breadwinner should typically have 10 times their annual salary in life insurance protection.  The amount of such protection in place currently is simply not enough to protect their families should the breadwinner pass away unexpectedly.  The Protection Gap we have identified equates to a massive opportunity for the insurance industry now – the mortality protection gap is worth approximately USD 124 billion in potential premiums to the industry,” adds Alexander.

Sizable mortality protection gap in both developed and emerging markets

The mortality protection gap exists when the proportion of protection needed is not yet covered by either insurance or savings (see figure 2). In India, for example, in 2010 every USD 100 needed for protection, there is only USD7.4 of savings and insurance in place, leaving a massive protection gap of USD92.6.

The study also computed the gap per working person with dependents (see figure 3). In more developed economies which are perceived to have more mature insurance markets, the gap per working person with dependents is substantial, which is partly explained by high income and cost of living.

Address life insurance needs

The continuing growth of Asia-Pacific economies will drive the need for even more life insurance protection. This study calls on the life insurance sector to understand such needs and reconsider how to best educate and guide the general public on life insurance matters.

Paul Turner, Head of Client Management, Division Globals says: “Large protection gaps in populous markets such as China and India imply tremendous growth opportunities, but developing attractive products and efficient and effective sales channels are essential to succeed and yet very challenging.”

“In more mature markets such as South Korea and Singapore, growth potential might be more limited, but the large gap per working person is already driving the development of protection products targeted at the high net worth customer segment,” says Turner.

Change consumer perception: Life insurance is affordable

The extent of the mortality protection gap across Asia-Pacific is also consistent with the findings of Swiss Re’s “Survey of Risk Appetite and Insurance: Asia-Pacific 2011” conducted between April and May 2011.

According to this survey, 40% of the respondents said their families would or might struggle financially in case of an adverse event such as early death. While insurance is widely considered an important protection tool, ownership of pure life insurance products is still low in many Asian markets.

The survey also identified the major barriers to purchasing insurance: 1) cost and 2) lack of available funds. Despite the perception that life insurance is expensive, over half of the survey respondents were willing to pay at or even above the market price for a pure life insurance product.

Turner adds: “This perception gap in customers’ minds is an opportunity for the life insurance sector to reach out and provide greater clarity to consumers on the relative cost and value of pure life insurance, for example, by comparing the cost of insurance with that of a cup of coffee a day.”

Figure 1: Mortality protection gap

Figure 2: Mortality protection gap – resources required vs resources readily available

Figure 3: Mortality protection gap per working person with dependents

Notes to editors 

About the study
This study uses a simple definition of mortality protection gap: only the gap for the working population with dependents is considered. This gap is measured as the difference between the income needed to maintain living standards for a person’s dependents and the sum of savings and life insurance in force available to them after the breadwinner’s death.

The full study report is available to journalists on request (

About “Swiss Re Survey of Risk Appetite and Insurance: Asia-Pacific 2011” 
This survey was conducted in April and May 2011, covering 13,800 consumers aged 20 to 40 across major cities of 11 Asia-Pacific developed markets (Australia, Hong Kong, Japan, Singapore, South Korea and Taiwan) and emerging markets (China, India, Indonesia, Malaysia and Vietnam). Please refer to the news release of 28 July 2011 (to add a hyperlink).

Swiss Re Ltd
Swiss Re Ltd is the holding company for the Swiss Re Group. Its shares are listed on the SIX Swiss Exchange and trade under the symbol SREN.

Swiss Reinsurance Company Ltd
Swiss Reinsurance Company Ltd is a leading and highly diversified global reinsurer and part of the Swiss Re group of companies. The company operates through offices in more than 20 countries. Founded in Zurich, Switzerland, in 1863, Swiss Re offers financial services products that enable risk-taking essential to enterprise and progress. The company’s traditional reinsurance products and related services for property and casualty, as well as the life and health business are complemented by insurance-based corporate finance solutions and supplementary services for comprehensive risk management. Swiss Reinsurance Company Ltd is rated “A+“by Standard & Poor’s, “A1”by Moody’s and “A”by A.M. Best.

Swiss Re has been associated with Asia since 1913 and now has about 1,000 staff in Asia-Pacific. The company's Asia headquarters is in Hong Kong.