Asia remains the most exposed region globally to natural disaster losses that are not covered by insurance, according to recent industry research. The insurance protection gap in Asia has reached 82.8%, meaning that only a small fraction of losses from climate-related catastrophes are insured. Latin America follows closely with an 81.0% gap, while North America’s protection gap is significantly lower at 43.2%, despite frequent severe weather events.
A new report from MAPFRE Economics, presented at COP30, highlights that the frequency and severity of extreme weather events are increasing, leading to higher economic losses. Insured losses from these events have been rising between 5% and 7% annually since 1992. The report identifies several causes for the widening gap, including limited insurance penetration in developing markets, rapid urbanisation in high-risk zones, and the intensifying impact of climate change.
Ricardo González, director of analysis, sectorial research, and regulation at MAPFRE Economics, pointed to data from the Swiss Re Institute showing that claims for insured losses from catastrophic events have consistently climbed over the long term, rising by 5% to 7% each year since 1992. He added: “Although this increase is often attributed to the impact of climate change, this phenomenon can also be explained by other factors, such as economic and population growth or expansion in vulnerable areas with poorly developed early warning systems or evacuation and prevention plans, or rising property values.”
The report points to the growing impact of “secondary perils” – events such as wildfires, droughts, and floods that occur more frequently but are less severe individually. These events now represent more than half of all disaster-related losses worldwide, placing additional pressure on infrastructure and communities.
In 2024, global economic losses from natural catastrophes surpassed $300 billion for the ninth year in a row, with nearly $145 billion of those losses insured. The expectation is that this upward trend will persist as climate-related disasters become more common and severe.
This global pattern was reflected in South Asia during the 2024 monsoon season, which brought unprecedented flooding and rainfall exceeding historical averages in countries such as India, Bangladesh, Nepal, and Pakistan. WTW’s analysis of the event highlights the increasing variability of climate patterns in the region and the challenges this poses for insurance coverage. Major urban centres experienced widespread disruption, illustrating the economic and social risks associated with underinsurance.
MAPFRE’s analysis states that addressing the insurance protection gap will require collaboration between insurers and government bodies. The report notes that frameworks for risk sharing and disaster response, such as Spain’s Insurance Compensation Consortium, could serve as models for Asia. It also addresses the role of prevention incentives, early warning systems, and parametric insurance products that enable payouts based on objective triggers. “Without adequate protection and compensation mechanisms, climate risks may become uninsurable or unaffordable,” the report said.
A separate assessment by the ASEAN Secretariat reveals that disaster risk financing adoption varies widely across the region. Indonesia and the Philippines have implemented advanced strategies, including catastrophe bonds and national risk pools, while other countries like Brunei and Cambodia are still developing foundational disaster management capabilities. Insurance penetration remains below 10% in most ASEAN Member States, limited by economic, educational, and distribution challenges.
Social safety nets also differ significantly, with Thailand and Singapore offering broader coverage, while other countries have less than 10% of their populations protected against disaster-related financial shocks.
