PwC: Protection gap could reach US$1.86tn by 2025, with Asia-Pacific region accounting for almost half of all uninsured risk

New report identifies five trends that will affect the future of insurance

19 May 2022 – Insurers and reinsurers came through the tests posed by COVID-19 remarkably well and dealt with unprecedented interruptions to their business by accelerating urgently needed digital transformation. They also proved their relevance in a time of extreme crisis – as an essential economic player and provider of protection and peace of mind for businesses and individuals around the world.

But a new report by PwC on Insurance in 2025 and beyond identifies five trends that will affect the future of insurance as the industry faces new challenges, including macroeconomic and structural headwinds; increased ESG demands around climate risk and social purpose; new forms of competition; changes in reporting and accounting standards; and the exponential growth in digital innovation. These trends include:

  1. A widening trust gap in an uncertain world
  2. Rapidly evolving customer needs and preferences
  3. An increasingly digital and AI-driven world
  4. Climate risk and a focus on sustainability
  5. Convergence, collaboration and competition

The challenges to the industry come at a time when the global protection gap (the difference between actual and insured losses), which reached US$1.4tn in 2020, is widening at an accelerating pace, according to PwC research. PwC’s analysis estimates this gap could reach US$1.86tn by 2025, with the Asia-Pacific region accounting for almost half of all uninsured risk.

Expectations are mounting for the industry to play a greater role in environmental, social and governance (ESG) issues, as both investors in and underwriters of other corporations.

Matthew Britten, Partner, Insurance at PwC Bermuda said: “Insurers and reinsurers must harness the momentum they’ve gained to reassess the future and determine what long-term changes are needed for their industry to serve a higher purpose in an uncertain world. One of the main economic lessons from the pandemic has been the importance of innovation, diversification and strategic agility in sustaining business resilience. And this has been heightened by a perfect storm of geopolitical instability, pressure on costs, competition for talent and changes in approaches to taxation globally.”

Currently, only 45% of insurers believe ESG is a very important factor in their underwriting activities, according to analysis by the PwC Market Research Centre. A separate survey by insurance asset management firm Conning suggested that almost 80% of insurers in the US have incorporated ESG factors into their investment strategies.

PwC’s Global Insurance ESG Strategy Survey 2022 finds that even though most insurers strive to reduce climate change impact, they have not taken significant actions on the environment aspects of ESG (12% of insurers globally have taken no action and 64% only meet the minimum requirements compared to 32% of re/insurers in Bermuda who have taken no action and 54% who meet the minimum.)

Trust is fundamental for insurance, and insurers clearly have a much bigger role to play in our society and economy than just protecting risks. According to the 2022 Edelman Trust Barometeronly 54% of respondents trust the financial services industry, 10 percentage points lower than the average for other industries in the report. This erosion of trust, combined with lack of access and poor financial education, has made customers less likely to buy insurance and has led to wider protection gaps and higher economic losses.

Though the scope of the change is broad and complex, PwC has defined five interconnected and mutually reinforcing strategic imperatives for all insurers to consider as they embark on their next phase of growth:

  1. Go on the offensive with digital
  2. Embrace customer-centric ecosystems to create new value
  3. Embed ESG in your organisation’s core
  4. Win the race for talent
  5. Put a premium on execution

About PwC

At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 156 countries with more than 295,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at

Contact us

Marina Mello

Senior Manager Marketing and Communications, PwC Bermuda

Tel: (441) 299 7184