Egypt has $2.8 billion insurance gap – Lloyd’s

Egypt has an insurance gap of $2.8 billion, marking a 1.2 percent of GDP, according to Lloyd’s latest underinsurance report.

The British insurance group’s A World at Risk: Closing the Gap Report showed there is a global insurance gap of US$162.5 billion in 2018, a reduction of just over 3 percent over a period of six years, a $168 billion in 2012. This indicates there is a significant gap between the level of insurance in place to cover global risks, and the actual cost to businesses and governments of rebuilding and recovering from major catastrophes, Lloyd’s said.

Emerging countries are the least insured, accounting for $160 billion, around 96 percent of the total global insurance protection gap, it added.

On the other hand, the average insurance penetration rate in the developed world is twice as high as in emerging countries, the report read.

In absolute terms, China has the biggest insurance gap of $76.4 billion, followed by India of $27 billion, and Indonesia of $14.6 billion).

Insurance Penetration

According to the report, Egypt besides Bangladesh, India, Vietnam, Philippines, Indonesia, and Nigeria each have an insurance penetration rate of less than 1 percent.

These countries “are also among the most exposed countries to risks such as climate change and some of the least able to fund recovery efforts.” Lloyd’s report said.

Since its 2012 report, there have been some notable changes to insurance penetration levels, Lloyd’s added. Yet, Egypt saw insurance penetration unchanged at 0.4 percent.

Best and Worst Insured Sectors

Lloyd’s published its first underinsurance report in 2012. The 2018 version included all the latest non-life underinsurance and insurance penetration data for natural catastrophes for 43 countries across the globe, revealing in detail insurance levels across multiple regions and industries. The report also analysed flood insurance in more detail, and discussed how cyber insurance can help businesses reduce the impacts of cyber-attack, one of the fastest-growing emerging risks.

Since Lloyd’s 2012 underinsurance report, the risk profile of the top 10 countries facing the highest risk as a proportion of GDP has hardly changed.

Real estate remained the best insured sector globally with an industrial insurance penetration rate of 0.74 percent. This was followed by transportation and storage (0.60 percent) and agriculture, forestry and fishing (0.60 percent).

Globally, the manufacturing sector had the lowest insurance penetration of all sectors at just 0.17 percent, the report said.