Asia has powered the global economy, yet disaster preparedness remains its greatest vulnerability. Resilience, not growth alone, will defi ne the future.
Asia is a major force for global growth, demonstrating impressive economic expansion, innovation and infrastructure development. This is thanks to progress made by nations to upgrade their transportation networks, physical and digital infrastructure and public services.
Yet the region faces frequent natural disasters, making it even more crucial to close its protection gap. Asia’s role in the global economy has undergone a dramatic evolution.
Once primarily a manufacturing hub, the region is the interconnection point for global supply chains, with Asian companies vital to supporting global trade. The region’s increased significance to the world economy means events not adequately risk transferred will have a direct impact on global markets.
THE CASE FOR PROACTIVE PROTECTION
According to UNICEF, disasters in 2024 threatened 17.7 million people including 6.5 million children just in Bhutan, India, Maldives, Nepal and Sri Lanka, a figure expected to rise in 2025.
Nevertheless, insurance uptake in most Asian countries has not kept pace with economic growth. According to the International Monetary Fund (IMF), Asia contributes 60% to global growth, yet the protection gap exceeds 80% in some Asian nations, notably higher than the global average of about 44%.
”Underinsurance and the challenges around distribution to those in need, create systemic vulnerabilities”
Asia saw $77bn in economic losses from natural disasters in 2024, well above the region’s 10-year average. Insurance covered only $13bn of these losses – less than 17% of the total amount.
Underinsurance and the challenges around distribution to those in need, create systemic vulnerabilities. When disaster strikes, companies that rely solely on their available financial resources take longer to recover. While competitors step in to fill the gap, the reputations and customer relationships of underinsured companies also suffer.
SUCCESS STORIES
Proactive measures are, however, helping to reduce the gap. In China, business continuity plans and a greater emphasis on prevention has substantially reduced natural disaster risks. Many of India’s large industrial companies have also implemented risk prevention and emergency response plans, although gaps remain in rural regions.
Similarly, Japan has developed one of the most comprehensive earthquake preparedness systems in the world, including early warning systems, strict building codes and community-wide training.
Its emergency response systems enable quicker recovery a er disaster, demonstrating how investing in preparedness saves lives and reduces damage. Leading businesses also work closely with insurers and risk consultants to enhance their resilience.
At AXA XL, catastrophe modelling, pre-loss planning and technical risk assessments help clients better identify vulnerabilities and refine response strategies. Ultimately, investing in preparedness, including client tailored insurance solutions, supports continuity, trust and long-term value.
Asia’s history and ongoing transformation offers valuable insights for companies and governments worldwide seeking to adapt to a changing risk environment.
Zoe Xie is Head of Property Underwriting, Singapore at AXA XL.
