Global Insurance Gap for Natural Disasters Widens

The high insurance coverage gaps for natural disasters in many regions are mainly due to low insurance penetration in many emerging economies. Also, to a greater concentration of population in cities and high-risk areas, and to a higher frequency and severity of extreme events due to climate change. In Latin America, only 19% of economic losses from natural disasters are insured, a gap that reflects the limited culture of financial protection against events such as floods, heatwaves, and intense storms. Closing the insurance protection gap for catastrophic risks is a challenge that requires coordinated action from insurance companies with all levels of government. Without the necessary protection and compensation measures and mechanisms, climate risks become uninsurable or unaffordable. According to research by Mapfree, in 2024, these types of catastrophes caused economic losses exceeding $300 billion for the ninth consecutive year, 14% more, of which about $145 billion were insured. Mónica Zuleta, Corporate Director of Sustainability at Mapfre, reported that insured losses from catastrophic phenomena have shown a sustained long-term upward trend, ranging from a 5% to 7% annual growth rate since 1992, according to the Swiss RE Institute. This situation leaves millions of people and companies exposed to the increase in extreme weather phenomena, according to the 'Climate Change, Extraordinary Risks and Public Policies' report presented by Mapfre Economics at COP30. The report highlights the importance of developing collaboration frameworks between public administrations and the insurance sector to manage and share disaster risks, for example, through entities that exist in countries like Spain.