The mortality protection gap in Australia almost doubled in 14 years, new research by Swiss Re has shown.

In a forthcoming report, the reinsurer estimates the gap was $US1 trillion ($1.3 trillion) last year, up from $US542 billion ($742 billion) in 2000.

Swiss Re Head of Business Development Asia David Alexander says the gap is the difference between financial need and funds available to maintain family living standards after a death.

The report on Asian underinsurance shows China has the largest mortality protection gap – $US32 trillion ($43 trillion) last year, up from $US18.5 trillion ($25 trillion) in 2010.

Australia’s gap is the fifth-largest of the 13 countries reviewed.

Across the region the mortality protection gap for a working person with dependents was $US175,685 ($240,617) last year, up from $US112,656 ($154,268) in 2000.

South Korea has the largest gap by nation, at $US402,589 ($551,218) last year.

Mr Alexander says advanced markets have larger per-capita protection gaps, reflecting higher income and smaller household size.

In Australia the average sum insured for working people with dependents was $US303,401 last year, up from $US67,496 ($92,418) in 2000. Australia leads the region, followed by Singapore with an average sum insured of $US154,585 ($211,674) last year. 

“In spite of rising sum insured, the protection gap still remains large in many markets, as the growth of life insurance coverage has lagged behind economic growth,” Mr Alexander told a Hong Kong briefing. “The large protection gap… emphasises the significant business opportunities for insurers in the region.

“Based on simple assumptions, the present gap… could translate into annual life premiums of $US173 billion ($235 billion).”

He says insurers should look beyond the numbers and examine the reasons for gaps.

“Is the gap initiated by the Asian traditional reliance on support from extended families, or insurers not providing [a] clear message of the value and cost of life insurance?”

Life insurers should develop strategies including diversified distribution channels and direct-to-consumer approaches.