Insurance
Insurance plays a critical role in supporting economic activity by protecting individuals, households and businesses against risk. The OECD supports governments to leverage the role of insurance in achieving economic, social and environmental objectives by monitoring insurance markets and developing guidelines and best practices.
Key messages
Climate change, new technologies and globalisation are creating new challenges. The OECD's work on insurance addresses these challenges to support countries in developing strategies for managing and insuring against evolving catastrophe risks.
The OECD produces analysis and statistics on insurance in OECD and non-OECD countries to help governments and the industry understand the evolution of insurance markets and formulate policies. The OECD also engages with industry and other stakeholders to understand the latest trends and risks affecting the insurance sector.
The effective financial management of disaster risks is a key public policy challenge for governments around the world. This is particularly true for those faced with significant exposures to such risks and/or those that have limited capacity to manage the financial impacts of natural and/or man-made hazards, such as floods, earthquakes, cyclones, terrorist attacks, industrial and technological accidents, and pandemics. Finding solutions to address climate-related risks and risks linked to cyber-attacks are high on the policy agenda.
The OECD provides guidance on the development of strategies for the financial management of disaster risks.
Technology and digitalisation provide important opportunities to expand the contribution of insurance to financial protection and risk management.
The OECD is examining the potential benefits of technology application in insurance and providing guidance on creating an environment that supports technology adoption while addressing potential risks to consumers.
A sound policy and regulatory framework is essential for the stability of insurance markets and for the protection of policyholders. Through its work, the OECD seeks to identify effective policy and regulatory approaches to the issues and challenges facing insurance markets and to identify the elements necessary for an effective and efficient policy and regulatory framework for insurance markets. It also promotes industry good practices and governance in the insurance sector.
Context
2022: A year of lower profits for insurers
Insurers recorded profits in 2022 despite challenges from a changing macro-economic environment. However, these profits were lower than in 2021, as underwriting profits and investment gains fell. Insurers’ equity capital also fell, especially for those operating in the life sector. This is a result of the unrealised losses on securities that were reflected through a downward revaluation of reserves in 2022.
The cyber insurance market is growing
In recent years, an insurance market for cyber risks has emerged to provide financial protection for some of the digital security and privacy risks that have surfaced with the growing use of data and digital technologies. While growing quickly – with some estimates suggesting that the market will double or triple in size in the next few years – the market remains small relative to other lines of commercial insurance business.
Quantifying cyber exposure and accumulation risk, limited data on past incidents, and misunderstandings about the scope and applicability of coverage for cyber risks across insurance policies remain challenges to addressing the significant financial protection gaps that exist for cyber risk.
Technology and insurance
Technology, including artificial intelligence, is changing the field of insurance. Listen to experts explain how, and the impact technology is having on regulation.
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