disaster insurance

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.

International insurance and reinsurance markets, including alternative risk transfer instruments and insurance-linked securities (ILS), have a vital role to play in ensuring basic human rights for people against the world’s catastrophe risks, according to a recent study.

The rise in global urbanisation to hazard prone areas, climate change and increased values at risk have sparked a new “era of catastrophes,” signalling an opportunity for the insurance and reinsurance sector to improve the management of extreme risks, according to Professor Howard Kunreuther.

Insurance and reinsurance remained at the heart of recent discussions on disaster and climate risk reduction and resilience efforts at the United Nations, with regulatory reform highlighted as required to make risk transfer more available.

A further 400 million people in regions of the globe vulnerable to the perils of climate change related hazards are to have access to catastrophe or disaster risk insurance by the year 2020, according to G7 leaders.

The fight to reduce global economic losses from natural disasters “is next to impossible” as rising wealth, population and urbanisation levels drive the upward trend, according to leaders from AIR Worldwide and the UNISDR.