Insurability is not only an insurance problem - it’s a growth problem. If a risk can’t be insured, it won’t attract capital and will lead to protection gaps. However, insurability isn’t fixed. With the right technology and data, insurers can transform uncertainty into opportunity, expanding the boundaries of what’s possible to cover.
What is insurability?
At its core, the concept of insurability is about the ability to assess, price and transfer risk.
From an individual or organisational perspective, it refers to the degree to which they are considered insurable based on assessments of potential risk.
In the 1980s, Baruch Berliner proposed 9 criteria as a checklist of sorts that a professional risk carrier would use to assess the insurability of a risk:
If a risk fails even one of the criteria, it is considered uninsurable by professional risk carriers (read more here at page 325).
In simple terms, to be insurable, risks should be random, independent, and statistically estimable, they should be economically viable to cover in the market and coverage must align with societal norms and willingness to pay.
But insurability isn’t static.
As Berliner put it:
“The insurance industry as a whole is increasingly confronted with risks where for reasons of principle and capacity doubts arise as to whether they can and should be covered. This increase of risks at the limits of insurability is due to growing social and accumulation problems, advancing technology and concentration of values, increased complexity and exposure to numerous risks.”
In Howden’s The insurability imperative paper, they propose that insurability is enabled by four factors:
- Risk modelling - quantifying and understanding risks, defining solvency and guiding capital flow shapes market access and creditworthiness.
- Risk management - adjust governance and internal frameworks to de-risk critical vulnerabilities for long-term insurability
- Risk sharing - expertise limitations and finite capital supply require risk sharing
- Public policy and financial regulation
The presence or absence of enabling technology is the fifth factor.
The role of technology in insurability
Insurability is shaped by how risk is understood and shared
Some risks may not be uninsurable by nature, but they become unfeasible to cover when data is inconsistent or unavailable, mitigation measures are unclear, or risk allocation is disputed.
This is especially true for systemic or evolving risks like climate impact, cyber-risk, pandemic and war related covers.
Digital platforms, de-fragmented integratable data sources and operating models make risk visible, shareable and manageable across stakeholders.
That means having the right tools, platforms and models in place.
- Infrastructure - Modern platforms make risk data visible, shareable and manageable across stakeholders.
- Data - High-quality, consistent and transparent data underpins everything from pricing models to regulatory compliance.
- Agility - Modern, digital infrastructure enables insurance businesses to iterate and adapt products and cover quickly to adjust to new risks without losing clarity or control.
This is where technology transforms insurability from theory into practice.
Insurability - from theory to practice
We’re already witnessing how tech-enabled models are expanding the boundaries of insurability in the real world:
- Parametric insurance: Allianz is using rainfall data in Colombia to trigger payouts for smallholder farmers when weather events threaten crops, bringing protection to a country where only 3% of arable land was previously insured. In Ghana, the model is being applied to co-develop a flood footprint model, aiming to protect 1.6 million people in vulnerable communities.
- Informal settlement fire insurance: South African social enterprise Lumkani distributes fire insurance underwritten by Hollard Insurance to informal settlement residents, where densely situated homes and limited firefighting availability often result in small, preventable fires gutting entire neighbourhoods. The fire insurance is bundled with low-cost heat-sensors installed in informal homes that provide early warnings to nearby residents and the authorities allowing for quicker response and evacuation.
- Telematics and motor insurance: Traditional insurers often avoided delivery drivers, viewing them as too risky or pricing cover at unaffordable levels. Insurtechs like Zego are reshaping motor insurance for the UK’s gig economy by using telematics and real-time driving data. Through tracking mileage and driving behaviour, they offer pay-as-you-go cover that matches actual risk and usage.
The common thread? Data, tech and system interoperability.
Where to from here?
Insurability is directly linked to the larger role that insurance plays in society.
Insurance is more than simply a societal financial safety net; where it exists, it encourages risk-taking and provides signals to capital allocators about the investability of assets or activities.
Where risks are uninsurable, protection gaps persist and the opportunities for growth and investment that are enabled by insurance are no longer viable.
Closing those protection gaps requires flexible, modern and robust technological infrastructure. Accessible data and systems that are capable of interoperability at scale through APIs are a necessary feature. Increasing insurability into the future requires tools that enable agility in product iteration and development without sacrificing control.
For those insurers and digital intermediaries who embrace modern infrastructure, insurability doesn’t limit growth - it makes growth possible.
