Life assurance: Research from Swiss Re highlights lack of consumer protection
Millions of people throughout the world lack adequate life assurance cover according to Swiss Re's latest study, Mortality protection: the core of life. The report shows that the shortcomings in consumer protection extend far beyond the UK.
The study, which estimates the size of the mortality protection gaps in five global markets, including Australia, Germany, Italy, Taiwan and the US, shows that millions of people worldwide do not have any cover or are insufficiently protected. It identifies significant shortfalls in the amount of mortality cover purchased in contrast to the amount required.
Each of the five markets studied has a sizeable protection gap ranging from US$0.2 trillion for Taiwan to US$10.6 trillion for the US. If the protection gap were to be filled, the average amount a family needs to spend each year on life assurance premiums would need to rise by US$98 to US$444, depending on the country.
In particular, Germany and Italy show huge potential for an increase in individual term life premiums, the report said. An additional US$141 per annum would need to be spent by an average Italian person to adequately meet their protection needs.
In Germany, an annual premium of US$359 is required to fill the average protection gap per worker with dependants. While in the US and Australia, the average annual premium would need to increase by 104% and 109% respectively.
Commenting on the report, Christian Stockli, senior actuary at Swiss Re and co-author of the report, said: "One of the most striking findings of the study is that each country we examined has a substantial mortality protection gap, despite many differences in how national markets operate."
The report also examined ways in which insurers, governments and employers can work together to close the protection gap. One possible suggestion was for greater workplace education, which could be complemented by insurance industry initiatives and government incentives.
"Clarifying how much coverage is needed and how much support is available from social security, existing life assurance coverage and available assets will help each family evaluate its own protection gap," the report said.
