Protection Gap Entities

As the climate crisis and other geopolitical factors make disasters more frequent and severe, disasters are becoming increasingly uninsurable. Without insurance to pay for reconstruction after fires, floods, and terrorist attacks, people suffer, and economies are set back. In response, many countries have established “Protection Gap Entities” (PGEs), organizations and schemes to keep disaster insurance available. PGEs rebalance the tensions (paradoxes) at the heart of insurance: who controls the insurance market (the private sector or government); how much is known about the risk (too little or too much); and who should pay (individuals or society). This chapter is accessible for those who have never heard of PGEs or thought about disaster insurance. We explain why PGEs are vital in adapting to an increasingly disaster-prone world. Our alternative view of the tensions PGEs face will also provoke thought for insurers and risk professionals concerned about the challenges of insuring disasters.