sigma 5/2019: Indexing resilience: A primer for insurance markets and economies

The latest sigma is an industry-first. We have constructed new indices that go beyond the traditional GDP growth measures for economic strength, and introduce a systematic approach to quantify insurance protection gaps. By "indexing" resilience, we show that the insurance industry continues to make society more resilient, even as the capacity of the global economy to absorb new shocks has waned and is now lower than before the global financial crisis ten years ago.

In constructing our innovative indices, we find a world economy that has become less resilient, and a record-high global protection gap of USD 1.2 trillion for three key risk pools.
Jerome Jean Haegeli, Group Chief Economist, Swiss Re

A primer for insurance markets and economies

Swiss Re Institute and the London School of Economics have together constructed a Macroeconomic Resilience Index, ranking countries with respect to a broad spectrum of variables to offer a much more holistic assessment of economic health than gross domestic product alone. Separately and independently, Swiss Re Institute has developed innovative Insurance Resilience Indices for three core areas of risk: natural catastrophe, mortality and healthcare. We find that resilience backed by insurance has improved in both the advanced and emerging markets since the turn of the century.

The record-high protection gap is a trillion-dollar premium opportunity for the insurance industry to further strengthen global financial resilience, all the more important in times of heightened recession risk.
Jerome Jean Haegeli, Group Chief Economist, Swiss Re

A few more specific key findings from our indices include:

  • The Swiss and Canadian economies consistently rank among the Top 3 most resilient in the world.
  • The advanced economies have become less resilient since 2007, and the emerging economies more so.
  • In relative terms, the biggest improvements in economic resilience since 2007 have been Asia and countries with close links to the region. Australia, for instance, has benefitted from proximity to and links with China.
  • From the insurance industry contribution perspective, there has been notable improvement in property catastrophe resilience in the advanced markets, and in mortality protection in the emerging economies.
  • There has also been significant progress in closing the healthcare protection gap in Asia Pacific.
  • By closing the record-high protection gap of USD 1.2 trillion for the three areas of risk, the insurance industry could boost global financial resilience to the tune of more than USD 1 trillion in claims payouts each year.
  • Further, closing the gap could yield additional profit potential of USD 60-80 billion for the industry annually.

Read our sigma to find out more.

More on measuring resilience

News release, sigma alert & sigma archive

Facts & Figures

Economic resilience indices by region, 2007 through 2018
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SRI Composite All-Peril Insurance Resilience Index
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SRI-LSE Macroeconomic Resilience Index, 2018 ranking by country, and index scores (2018 and 2007)
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sigma Indexing resilience: A primer for insurance markets and economies


See the previous sigma issues