Protection gap is not one problem, Catlin tells ABIR audience

Stephen Catlin (pictured), founder and life president, Convex, has said the protection gap debate must start with the ‘basics’. He was speaking in the context of the role public-private partnerships can play in narrowing the protection gap, a topic that came under scrutiny at the ABIR Risk Forum 2026, which took place in Bermuda this week.

The session, “The Power of Partnerships”, was moderated by Jeff Manson, SVP, Underwriting and Head of Global Public Sector Partnership, RenaissanceRe. In addition to Catlin, it featured Jonathan Dixon, secretary-general, IAIS; Clement Cheung, CEO, Insurance Authority of Hong Kong; and Dennis Noordhoek, director of public policy & regulation, Geneva Association, in a discussion focused on how partnerships can help close protection gaps.

While the panel ranged across regulation, public-private insurance schemes and the role of governments in risk reduction, Catlin’s comments provided a particularly direct industry perspective on the challenge. Drawing on his experience as a steering committee member and former chair of the Insurance Development Forum (IDF), which marks its 10-year anniversary in 2026, he argued that the protection gap debate has to begin with a clearer understanding of what is actually driving the gap in different markets.

“I think we need to get back to basics here,” Catlin said. In his view, the protection gap is not a single issue that can be solved with a single framework. Instead, it arises for very different reasons depending on the nature of the loss, the structure of the local economy and the level of resilience and mitigation already in place.

That insight, he suggested, became clear in the early days of the IDF, when senior brokers, carriers, the World Bank and the UN were all brought together around a common objective. Catlin said that in itself was unusual, with competing market participants sitting at the same table to address a shared problem. But the early discussions also revealed how difficult it was to reach consensus.

According to Catlin, one of the most important lessons from that process was that the industry’s role has limits. Insurers and reinsurers can contribute expertise, analytics and time, but they cannot treat shareholder capital as if it were philanthropic funding. “The P&C industry is not a charity,” he said, stressing that insurers still have to generate a return on capital for investors.

That distinction matters because it shapes what kinds of public-private partnerships can realistically work. Catlin said there is now a much better understanding between the industry, the World Bank and the UN than there was at the outset of the IDF, but the underlying complexity has not gone away. The reasons behind protection gaps in Florida, California, Haiti or lower-income economies are fundamentally different, and any attempt to address them must reflect that.

He pointed to Florida as an example of how the same broad issue can take a very different form in a wealthier jurisdiction. Because the state is large and affluent, it has been able to invest in stronger building codes, which in turn have helped reduce the severity of losses over time. But that is not a model that can simply be lifted and applied elsewhere. In poorer countries, or in markets with weaker public finances, the ability to fund and enforce resilience measures may be far more limited.

Catlin also highlighted California, where he said the protection gap reflects not just catastrophe exposure but behavioural and political factors. In his telling, some property owners have concluded that if a major quake or catastrophe occurs, the state or federal government will ultimately step in, reducing the perceived need to buy insurance. That creates a completely different kind of gap from one driven by poverty, weak infrastructure or an absence of available cover.

This was central to his broader point: the market needs to stop talking about “the protection gap” as though it were a single, unified problem. It is, he suggested, really a collection of many different problems, each requiring different solutions.

Catlin also linked the discussion to changing climate risk and the growing importance of better data. He argued that improved analytics, and eventually the use of AI to interpret that data more effectively, should make it easier to identify where risks are increasing and where mitigation and pricing need to evolve. He cited wildfire as an example of how exposure can build silently over time and then become catastrophic in scale.

But even with better data and better modelling, he suggested that insurance cannot solve everything on its own. That was echoed more broadly in the panel discussion, where references were made to risk reduction, private market development and the role of governments in supporting affordability, resilience and last-resort protection.

One model Catlin said deserved attention was Pool Re, which he described as a practical example of how a public-private structure can provide meaningful protection while preserving incentives and financial discipline. In that structure, insurers absorb an initial level of loss, a fund is built up over time and the government effectively provides an unlimited stop-loss beyond that. For Catlin, that remains one of the clearest examples of a workable model for dealing with difficult, systemic risks.

Across the session, the broader message was that partnerships matter because neither the public nor private sector can address widening protection gaps alone. But Catlin’s contribution added a note of caution to that consensus: partnerships will only work if they are grounded in a realistic view of capital, incentives and the fact that protection gaps are not created equally.

As the IDF approaches its 10-year anniversary in 2026, his remarks suggested that the conversation has matured, but that the hard work of turning broad ambition into workable market solutions is still very much in progress.

The Association of Bermuda Insurers and Reinsurers (ABIR) represents Bermuda’s major property and casualty insurers and reinsurers. The event was supported by ABIR member companies and event partners KBRA, Bermuda Business Development Agency (BDA), and Deloitte, along with education partner The Institutes Knowledge Group.

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