natural disaster

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.

Rare but extreme natural disasters and catastrophes can cause sovereign ratings downgrades, with the biggest impacts seen from earthquake and tropical storm simulations, making sovereign risk transfer and catastrophe insurance key, according to S&P.

The global insurance and reinsurance industry will pay for an above average percentage of economic losses from natural catastrophes and man-made disasters in the first-half of 2015, according to reinsurer Swiss Re.

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.

Economic losses suffered during June from the monsoon season in China led to the largest impact of the month, with almost $4 billion of impact to the Chinese economy, according to Aon Benfield’s Impact Forecasting unit.

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.

2014 saw the highest number of natural catastrophe events that global reinsurance firm Swiss Re’s sigma unit has ever recorded, but despite the increasing frequency of loss events, the impact to insurance and reinsurance markets was below average.

The World Bank has significantly expanded the range of disaster risk transfer, management and financing options it offers to clients, adding coverage for risks outside of pure natural catastrophe events and also insurance or reinsurance options.

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.