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Addressing the global catastrophe protection gap

From AIR Worldwide

The difference between economic and insured losses caused by a natural catastrophe—the “protection gap”—illustrates insurers’ potential for growth and society’s need for protection. Understanding the size of this gap and the scope of potential losses is a key component in beginning to address the need.

Average annual insured catastrophe losses, as modeled by AIR Worldwide, are less than a quarter of the global economic loss estimate from such events; no significant narrowing trend in this protection gap is evident. You can find out more about the protection gap in this year’s edition of our Global Modeled Catastrophe Losses report.


The report presents key loss metrics from our global industry exceedance probability (EP) curve. We estimate the global modeled insured average annual loss from catastrophes worldwide is about $92 billion, with a 1 percent probability in any given year for those insured losses to exceed $288 billion—more than double the losses seen in 2017 from Hurricanes Harvey, Irma, and Maria, California wildfires, and other natural catastrophes. The 2019 report derives its loss metrics from our most current suite of global property and crop models, including new models and updates released during 2019 as well as databases of property values for more than 110 countries. Excluded are losses from our pandemic, cyber, and casualty models.

An issue without borders

The protection gap, which can hinder society’s resilience to extreme events, is a problem that’s not confined to the developing world. Two earthquakes struck Southern California in the first week of July—only 34 hours and less than 7 miles apart—in a state where only about 15 percent of homeowners have earthquake insurance.

Such insights can help insurers pursue areas of profitable, manageable growth while fulfilling a social responsibility to provide protection and aid in potential future recovery efforts.

Download AIR’s 2019 Global Modeled Catastrophe Losses report.

Rob Newbold

Rob Newbold is executive vice president of business development, marketing, and client services at AIR Worldwide. You can reach him at

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