Insurance plays a central role in financial inclusion by shielding households from major shocks and supporting productive risk-taking, according to new research from the Geneva Association.
The industry group said insurance helps prevent families from sliding into poverty when confronted with events such as illness, death or natural disasters.
The report notes that more than 1.3 billion adults worldwide remain outside formal financial services despite gains in banking access and digital payments. Protection gaps are especially wide in emerging markets, where savings and credit are not seen as adequate substitutes for insurance’s risk-pooling function.
Recent catastrophe-loss data pointed to how those gaps are playing out in practice, with global modelled insured average annual property losses from natural disasters estimated at US$152 billion. Yet insured losses still cover only 12% of economic losses in Asia and 32% in Latin America, compared with 48% in North America, suggesting that rising exposures are outpacing insurance uptake in many regions.
Cross-country data in the Geneva Association study link broader financial inclusion with higher economic growth through mobilised savings, increased entrepreneurship, lower poverty rates and more stable financial systems.
The analysis also finds that women’s participation in formal finance has an outsized stabilising effect because of typically higher savings and repayment rates.
“Insurance is a foundational but often overlooked component of financial inclusion,” said Kai-Uwe Schanz (pictured above), director of financial inclusion at the Geneva Association and lead author of the report. He added that emerging economies “have an opportunity to leapfrog traditional models through digital innovation and public-private partnerships.”
The Geneva Association commissioned a survey of about 1,000 households in each of seven markets: Brazil, China, India, Mexico, Morocco, South Africa and Türkiye. Across these countries, respondents ranked medical expenses as their leading concern in nearly all markets.
China and India reported the highest levels of insurance penetration, with around three-quarters of surveyed households holding at least one policy. The report attributes this to the role of digital ecosystems and large-scale government schemes in bringing coverage to mass-market segments.
Digital payments have become nearly universal in the seven countries, the survey shows, while formal borrowing remains less widespread. The findings suggest that access to payment platforms is outpacing the development and use of credit products.
At least 70% of respondents in every surveyed market said they see insurance as useful and rated it more favourably than credit. The main obstacles to purchasing health and life coverage were affordability, limited understanding of products and low prioritisation compared with other household expenses.
The Geneva Association’s call for more inclusive insurance comes as other researchers flag macro-level headwinds that could widen protection gaps.
Rising tariffs and geoeconomic fragmentation may push up insurance costs, limit international risk diversification and reduce cooperation on climate, pandemic and cyber risks, leaving both insurers and clients with higher residual exposures.
To expand inclusive insurance, the Geneva Association report points to three main pillars. These are commercial innovation, including simple products, embedded distribution and digital underwriting; public policy measures such as subsidies, literacy efforts and digital infrastructure; and regulatory frameworks that allow microinsurance licensing and sandboxes while maintaining consumer protection.
