Closing the protection gap: Paula Jarzabkowski and Julian Enoizi on the need for a collaborative approach

Major catastrophic events frequently highlight the central challenge in disaster risk financing: the gap between those who have protection against these losses and those who don’t.

For those who can afford to buy cover, the private insurance market has served as a safety net, enabling property and often livelihoods to be restored in the aftermath of loss.

But in some cases, private insurance is not a viable solution. Certain exposures are deemed too big for private insurers to sustainably insure, or in other cases those at risk do not have the funds to pay for cover. Solving the protection gap for these exposures remains a major challenge for both the industry and society.

Paula Jarzabkowski, co-author of a new book examining this challenge – Disaster Insurance Reimagined: Protection in a Time of Increasing Risk– met with The Insurer TV to explain some of the challenges in addressing the protection gap, highlighting the need for the public and private sectors to work together.

Jarzabkowski’s research found that governments and insurance markets have been collaborating since the 1800s to address protection gaps in various forms. Not all of these have been public-private partnerships – some are fully private entities without any form of public guarantee.

The most effective have some form of prevention aspect, including those that use a percentage of premiums towards loss mitigation. One example being Flood Re, the UK’s flood reinsurance backstop, which has been working to encourage more insurers to adopt its Build Back Better principles.


Jarzabkowski has coined a new term for reinsurance public-private partnerships: PGEs (protection gap entities). She believes that as well as picking up losses, these mechanisms should also use their knowledge to help reduce the level of losses incurred in the future.

“What we need to do is elevate this dialogue within society. We take for granted that advanced economies run on insurance being there in the background,” she explains in the interview.

As climate change threatens to alter the disaster risk landscape, Jarzabkowski warns that the challenge around insurability no longer only impacts the most vulnerable.

“We are now getting people with high-value assets who simply cannot access insurance – that is going to change the wealth profile of our countries,” she says.

“I hope we do not sleepwalk into a future where something that we relied upon – disaster insurance and its ability to maintain mortgages and homeowner wealth – drifts away because we don’t deal with some difficult questions.”

She says it is critical to rethink how we consider insurance. “For a long time it's been thought of as being about demand and incentivising individuals to do the right thing, but it is no longer an issue of demand and incentives.

“It's about affordability, and the fact insurers themselves do not want to take some of the risk. So we need to start having a different dialogue about what is the right amount of risk people should try to insure.”

Jarzabkowski believes the industry is ripe for transformation, but needs to have the conversation around how a concept such as PGEs can work to the benefit of all.

“The future is some form of collaboration. I would like to see the insurance and reinsurance sector come to this with an open attitude about how we can make the system work. Because if the system works, they too remain sustainable,” she says.

She was joined in the interview by Julian Enoizi, now CEO for Europe at Guy Carpenter. Enoizi previously led UK terrorism backstop Pool Re for nine years and has since headed up Guy Carpenter’s public sector practice.

His experience has put him at the forefront of industry efforts to engage with the public sector to better manage risk.

Enoizi highlights how it is critical to design solutions that are accessible to people.

“If we don't make cover accessible for people, then the resilience of society as a whole is going to be reduced.”

For certain perils, such as terrorism, climate change and potentially cyber, Enoizi believes the risk can only be covered in partnership with governments.

“For something as large as climate change, the big challenge there is how do we shift our post-disaster financing so some of that money goes into pre-loss adaptation.”

While there are several industry entities currently looking at the challenge, Enoizi believes it requires the industry to act as one to provide solutions.

And while there are conversations taking place where the industry is coming together in an attempt to address these challenges, Enoizi believes more still needs to be done.

“We are still hitting singles. We've got to start hitting home runs,” he says.

Watch the full 17-minute interview with industry academic Paula Jarzabkowski and Guy Carpenter Europe CEO Julian Enoizi to hear what they have to say about the need to step up efforts to manage systemic risks.