disaster insurance

The World Bank is working alongside the governments of Singapore and Japan to establish a disaster insurance pool to cover infrastructure risks for Asian countries, with the facility set to provide coverage from later this year.

Disaster risks and costs are on the rise in Asia, a region where under-insurance is still the norm and spending by government’s on contingent sources of disaster risk financing relatively scarce, leading the Asian Development Bank (ADB) to call for more to be done.

Japan is set to back and help fund the launch of the Southeast Asia Disaster Risk Insurance Facility, a parametric disaster insurance pool that will be established to serve ASEAN nations including Laos, Myanmar and Cambodia to begin with.

The Asian Development Bank (ADB), a financial institution that supports economic growth and cooperation in the Asia-Pacific region, has hired Thomas Kessler, a long-time Swiss Re executive, into a newly created role focused on disaster risk insurance and financing.

Natural disasters, such as weather and geophysical catastrophe events, have been the direct cause of sovereign rating defaults in the past, but risk transfer, insurance and reinsurance can all help to support sovereign credit worthiness, with catastrophe bonds a tool available to help countries manage disaster risk.

During the last decade more than 40% of global disasters have occurred in the Asia-Pacific region, affecting over 1.4 billion individuals and causing economic damages of beyond half a trillion dollars, truly underling the need to narrow the insurance protection gap.

The Vulnerable 20 (V20), a group of the most vulnerable nations to weather extremes and a changing climate, is aiming to establish a risk pooling mechanism for climate related risks within the next five years, it was announced at a recent meeting.

The insurance, reinsurance and capital markets risk transfer sector has reached an inflection point in terms of tools, techniques and capital to address climate and disaster risks, now demonstrating the potential to scale-up and expand in scope, according to the United Nations.

The commitment and capabilities of public and private sector entities is essential to closing the world’s ballooning protection gap, underlining the necessity of adequate insurance, reinsurance and alternative catastrophe risk financing, says Swiss Re.

The protection gap – underinsurance in emerging and developing economies and the gap between economic and insurance losses – has been a hot topic for the world’s leading reinsurance companies and brokers at this year’s Monte Carlo Rendez-vous.