OECD: Protection Gaps in Insurance for Natural Hazards and Retirement Savings in Asia
SDG 1: No Poverty
SDG 13: Climate Action
Institutions: Ministry of Finance; Ministry of Environment, Forest and Climate Change; Ministry of Labour & Employment
This report examines significant monetary protection gaps, across Asia, related to insurance for natural hazards and retirement savings. Natural hazards - such as floods, earthquakes, and cyclones - have caused annual average losses of around USD 48.4 billion (2000–2023), yet only about 5-7% of these losses have been insured, highlighting entrenched vulnerability despite growing disasters. Demand-side obstacles include lack of awareness, affordability constraints, mistrust in insurers, and misconceptions about coverage. Supply-side challenges include insurer reluctance due to risk exposure, limited catastrophe modelling data, inadequate reinsurance options, and weak enforcement or pricing regulation.
On retirement savings, coverage excludes many informal workers, women, and those in small enterprises. Design flaws - such as short contribution periods, early withdrawal provisions, rigid investment limits, insufficient portability, and absence of lifetime income solutions - undermine adequacy of retirement benefits.
The report recommends multifaceted policies: boosting insurance literacy, leveraging digital and bancassurance channels, mandating hazard coverage inclusion, expanding mandatory pension coverage with auto-enrolment, extending retirement age, enhancing investment diversification, improving portability, restricting early withdrawals, and ensuring lifetime income products.
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