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The Role of Insurance in Mitigating Social Inequality

01 September 2020 Kai-Uwe Schanz, Deputy Managing Director, Head of Research & Foresight and Director Socio-economic Resilience

COVID-19’s present and foreseeable social and economic impacts are a call to invigorate and recalibrate discussions to address social inequality.

Our new report, The Role of Insurance in Mitigating Social Inequality, illustrates that private insurance can alleviate social inequality by covering exposures that may push middle-class individuals and families into poverty or perpetuate poverty for low-income households. The report points to four types of insurance coverage in particular that mitigate the risks of impoverishment and/or contribute to more stable levels of wealth and income:

1. Term life insurance pays a specific sum to a family upon the death of its breadwinner, helping to relieve any financial hardship.
2. Annuities protect against longevity risk by providing a stream of monthly income for life in exchange for a premium.
3. Wage insurance could offer a temporary earnings supplement for workers facing a reduction in wages after re-employment.
4. Livelihood insurance, though largely in the conceptual stage, would insure against a slow erosion in someone’s earnings over time, as a result of automation, for example.

Furthermore, with government budgets severely strained by the COVID-19 crisis and recovery, the report encourages new public-private partnerships that leverage insurance as a critical part of the social safety net.

Private insurance was not designed to address social inequality per se. But the set of approaches and actions suggested in this report reveal that by providing financial protection to vulnerable segments of society, insurers are positioned to effectively tackle social inequality as well.

Read the report

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About The Geneva Association

The Geneva Association is the only global association of insurance companies; its members are insurance and reinsurance CEOs. Based on rigorous research conducted in collaboration with its members, academic institutions and multilateral organisations, The Geneva Association:

- identifies and investigates key trends and risk areas that are likely to shape or impact the insurance industry and develops corresponding recommendations for the industry and for policymakers;

- provides a platform to its members, policymakers, academics, multilateral and non-governmental organisations to discuss these trends and recommendations;

- highlights the positive contributions of insurance to a better understanding of risks and to building more resilient and prosperous economies and societies - in both developed and emerging countries - and thus a more sustainable world.

In total the companies of Geneva Association members are headquartered in 25 countries around the world; manage USD 17.1 trillion in assets; employ 2.4 million people; and protect 1.8 billion people.

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