Environmental disaster and major acts of terrorism lead to economic costs that exacerbate the suffering of the victims.
Our research has introduced novel frameworks and terminology to evaluate the activities of 'Protection Gap Entities' (PGEs) - organisations that provide insurance to cover otherwise unprotected disaster risk.
PGEs, insurance companies, governments, and development agencies around the world have drawn on this research to inform their strategies and evolve their insurance schemes. The result has been improved financial protection against disaster, and a better climate for economic, social, and personal recovery.
What did we explore and how?
The economic and social cost of natural disasters around the world has been on the increase. Increasingly, the losses they incur are under-insured.
In what has become known as the 'protection gap', some 70% of global losses from weather-related disasters are not insured. Other types of disaster, such as terrorism and pandemics, also contribute to this financial crisis.
In response, governments, development organisations, and insurance organisations are collaborating to establish not-for-profit mechanisms we've termed 'Protection Gap Entities' (PGEs). These cover otherwise unprotected disaster risk.
Following a large-scale, longitudinal qualitative study, the researchers analysed how and why PGEs are established, recorded their different approaches to sharing risk, and made recommendations on how barriers to their work in addressing protection gaps could be overcome.
We found that PGEs face a contradiction between their not-for-profit aims for disaster protection, and their use of a proft-based insurance market to pay for such protection. Therefore, we developed conceptual models and best practices for how PGEs can work with these contradictions.
Benefits and influence of this research
Our research has provided PGEs (and the insurance, government community, and non-government organisations that work with them) with the tools to develop their ability to offer protection alongside evolving risk profiles. We have also shown how neglected contradictions can escalate, leading to increasingly unprotected risk.
The research has stimulated and informed policy debate in the UK and around the world. The research findings were keynote presentations at:
- World Forum of Catastrophe Programmes (Madrid 2018)
- International Forum of Terrorist Risk (Re)Insurance Pools (Moscow 2018 and Brussels 2019)
and presented at:
- World Bank 'Understanding Risk' Forum (Mexico 2018).
The research results have been presented on a UK Government webinar, and at fourteen industry keynotes in nine countries. They have also received significant media coverage.
We have presented to the UK Treasury Insurance Team, informed the review and retention of the Australian terrorism PGE in the Australian Insurance Terrorism Act 2018, and were commissioned by the Canadian Finance Ministry to evaluate ways of managing Canadian earthquake risk.
Professor Jarzabkowski led a report to inform the UN Summit on Climate Adaptation, and the research team's work on PGEs comprises the basis of key recommendations for a European Commission study and report on public/private means for addressing nuclear liability across the European Union.
The research has also been used in the World Bank and United Nations Disaster Risk Reduction division for the training of civil servants in low/middle-income countries. In addition, PGEs in the UK and Australia applied our frameworks for strategic planning and educating advisory groups.