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Standardized infrastructure and standards urged to close the insurance gap

A new paper argues the protection gap is being driven less by limited capital and more by an adaptation gap between fast changing risks and the insurance and capital markets built to transfer them.

Reported · Written up by our desk · Industry & Deals

As the global insurance protection gap continues to widen, Montauk Point’s Chief Risk and Analytics Officer, Gero Michel, argues the issue is not primarily a shortage of capital, but a structural mismatch between evolving risks and the institutions meant to transfer them, according to a paper discussed by Artemis.

Michel points to an adaptation gap caused by translation, innovation, and structural barriers between a specialized insurance industry and capital markets that require transparency and standardized infrastructure. The paper says risk drivers are changing faster than insurers and capital markets can adapt, with climate change and geopolitical instability increasing uncertainty in established lines.

The paper also links the widening gap to changes in how risks behave and where economic value sits, noting that globalization, digitalization, and efficiency-driven systems are making risks more interconnected and systemic. It adds that a growing share of economic value is in intangible assets, data, networks, and supply chains, which are harder to define, value, diversify, and insure.

Artemis reports Michel argues globally compatible insurance standards for products, data, and legal frameworks could be a prerequisite for scalable risk transfer, because insurance standards may matter more than new products or additional capital. The paper says capital markets could help bridge the gap, but capital will only flow if investors see credible models, legal certainty, governance, scalable structures, and sufficient market depth.

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