Enda Murphy

The level of demand for Insurance has been declining in western developed economies. At the recent European Insurance Forum (EIF) in Dublin. Enda Murphy, EVP and Head of Global Business Operations at RGA International Reinsurance, addresses the “insurance gap”, why it has evolved, and how to increase penetration.

Mr. Murphy says insurance penetration over the last ten years has been declining, with protection insurance taking up a smaller proportion of GDP in every major market except Asia. In the U.S., where GDP has grown by about 17% over that period, the insurance penetration of GDP has dropped from 1.9% to 1.6%. A Geneva Association Report reveals that “the number of households in the U.S. that had protection insurance ten years ago was about 64% in 2014, had dropped to 42 (%).” This shows that insurance is taking up a smaller portion of GDP.

According to Mr. Murphy, the downward trend in insurance coverage can be attributed to the recent economic downturn, changes in solvency regulations and increasing regulation on direct sales forces. Every time solvency regulations change, it forces insurers to take their minds off what the consumer wants, and also changes the ultimate price of insurance. In addition, “Regulation has made it difficult for direct sales forces to operate. Insurance is sold and not bought, so if you don’t have a direct sales force, it’s one means of access to the consumer that is not available anymore.”

Because of the economic recession, Mr. Murphy says governments have to reevaluate their economic and social welfare policies. With an insurance gap, the economic burden falls back on the state, and the state will either increase its taxation or decrease its benefits. “This is not a pleasant place to be.”

To address the insurance gap, Mr. Murphy believes the industry leaders “… need to get regulators, the industry, and most importantly policymakers to recognize what is happening….(and) work with government to create incentives for people to buy their own insurance.”

For more World Risk and Insurance News from the 2015 European Insurance Forum (EIF) Conference in Dublin, visit the dedicated EIF 2015 Channel in the WRIN.tv On Demand Library.

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