Asia-Pacific insured only 5% to 7% of hazard losses

Additionally, more than half of the countries had less than 5% of losses.

Only 5% to 7% of Asia-Pacific’s (APAC) losses caused by natural hazards were insured over the past two decades, according to the OECD.

Additionally, more than half of the countries had less than 5% of losses were covered. Earthquake insurance penetration is especially low.

Natural hazards in emerging and developing APAC countries, including floods, earthquakes, and cyclones, caused average annual losses of $48.4b between 2000 and 2023, with floods accounting for 46% of losses. 

Losses have surged 165% over the past two decades, with weather-related losses rising from $10.8b in 2000 to 2004 to $42.4b in 2019 to 2023. 

The protection gap places a heavy burden on households and businesses, slowing recovery and putting pressure on public finances.

Rising hazard frequency and severity are expected to widen the gap further and push premiums higher, making coverage less affordable.

Key demand-side drivers include low risk awareness, misunderstanding of coverage needs, reliance on government disaster aid, lack of trust in insurers, and affordability issues. 

In many countries, coverage for natural hazards is sold as an optional add-on rather than included in standard property policies, which discourages take-up. In Indonesia, for example, fewer than 5% of households with property insurance buy optional flood coverage.

On the supply side, premiums are shaped by risk assessment, reinsurance costs, distribution expenses, and regulatory pricing frameworks. 

Whilst some progress has been made, insured losses as a share of economic losses rose from 2.6% in 2000 to 2009 to 6.6% in 2014 to 2023.