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Swiss Re Reveals Huge Gap in Life Coverage in Europe, Opportunity in Untapped Market

Source: Swiss Re

Posted on 27 Sep 2010

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Swiss Re will today unveil a new report which says that hundreds of thousands of people across Continental Europe do not have enough life insurance.

The report also includes the results of a survey commissioned by Swiss Re among more than 11,000 consumers. According to the survey:

* Consumers have a clear need for life insurance, but many are unaware of how it can help deal with the financial impact of death, illness or disability.

* Perceived cost is a barrier to buying cover, whereas life insurance products are in practice affordable and within the price people are prepared to pay.

* Consumers are generally at ease using existing distribution channels to buy life insurance, but insurers need to engage better with consumers and build trust in the industry.

In Swiss Re's view there is a sizeable untapped potential for life insurance to protect people's financial needs effectively and affordably in the event of death, illness or disability.

Europe's consumers under-insured by EUR 10,000 billion

To demonstrate the extent of under-insurance with respect to life cover, Swiss Re has calculated a pan-European 'Mortality Protection Gap' amounting to sums assured of more than EUR 10,000 billion across all 12 Continental European countries featured in the report.

The gap compares the amount of money available to dependents in the event of an untimely death against how much consumers actually need to ensure their dependants’ financial needs are met. In order to keep the calculation simple, critical illness and disability is not covered.

In potential premium terms for life insurers, the amount translates into a staggering EUR 25 billion per year. According to the report, if a single company could penetrate this potential by just 1%, it could boost its annual life insurance premiums by EUR 250 million.


The survey indicates that most consumers in Continental Europe see the need for some form of financial protection in the event of illness or untimely death. Only 11% of respondents across Europe claim to be "well positioned financially" if they die, or suffer a long-term illness or disability.

But the survey also shows that many people over-estimate the amount of life cover they hold, and that large numbers regard savings as the main way to cover death or sickness. And it reveals that a staggering 26% of consumers expect to rely heavily on government benefits in the event of financial misfortune due to death or illness.


The report urges life insurers to better ensure that potential customers understand the true value of protection insurance.

Asked what stops them buying an insurance product, 48% of survey respondents say price is an issue. But nearly half would pay more than EUR 20 per month for a life insurance policy providing EUR 100 000 of cover. In fact, in many places in Continental Europe consumers can buy EUR 100 000 of life insurance covering a 10-year period for as little as EUR 10 per month.


The way a product is distributed has a strong influence on consumers' comfort level and confidence in buying life insurance, and views differ strikingly between the countries surveyed in the report. Across all survey respondents, 97% are comfortable to some extent with at least one distribution channel – a result that Swiss Re finds encouraging.

Traditional sales channels such as independent advisors and insurance company salespeople are among the most popular, followed by sales conducted over the internet. But fewer than 10% of respondents favour alternative forms of distribution such as supermarkets.

Asked the main reason against buying life insurance cover, on average one in every 10 people say that trust is the main barrier preventing the industry from fully engaging with them. Swiss Re believes that life insurers can counter this by promoting the benefits of protection cover more proactively.

The European Insurance Report 2010, 'Customers for life'

These findings – comprised in the full report entitled The European Insurance Report 2010, ‘Customers for life‘ – will be presented to Swiss Re's clients today at a major conference hosted in Munich and attended by senior representatives of Europe's leading life companies.

Martin Albers, Head of Swiss Re's Europe Division will say: "There is a huge gap in protection. It varies by country but there are hundreds of thousands of under-insured people who need the financial protection provided by life insurance. Making even small inroads into this gap can translate into significant opportunities for this industry.

"We need to be bolder in selling the benefits of insurance – of how lives can be rebuilt after illness or injury, or of how families can be saved from financial hardship through the security of a life policy.

"We also need to highlight the value of life insurance compared with other sources such as savings and government provision, and to show that life insurance is often the most affordable and suitably-responsive solution to people's financial needs," he will add.