Swiss Re has just released its 2015 sigma report on natural catastrophes and man-made disasters. First the "good" bad news (if there is such a thing): this year's natural catastrophe losses were below the 10-year average and the 26,000 lives lost were also a smaller number than the average number since 1990. But now the really bad news: this year the protection gap, the difference between the economic losses and the insured losses, was USD 55 billion. That means that almost 60 cents of every dollar destroyed is born by society, by you and by me.
When we look in detail at the case of the earthquake which struck Nepal last year, the figures are even more breath-taking: out of the estimated USD 6 billion loss, only USD 160 million were insured. To an economy like that of Nepal a blow of 30% of GDP means a developmental set-back of several years, without even counting the effect of the tragic loss of almost 9,000 lives.
No single actor can make the G7 initiative on climate risk insurance (making protection available to another 400 million people by 2020) happen by him or herself; governments, NGO's, society and, of course, the insurance industry need to jointly tackle the problem and find the solutions. Collaboration is the key.
Next Monday we will be hosting in our Centre for Global Dialogue in Rüschlikon, Switzerland, about 100 of our partners, including insurers, brokers and modellers, to discuss how we can improve the perception of insurance and to come up with innovative solutions in order to extend coverage to those risks which currently make up this protection gap.
I'm really excited about listening to the consumers' views on how to give them more value for their money. And I am curious to hear from our clients on how we can ensure that products are simple and useful. The event will also give room to discuss how regulation can create a fertile ground for these innovations and the role technology can play in ironing out some of the system's imperfections and improving the likelihood of a policy being bound.
Technology is already playing a major role in loss assessment as could be seen with the Tianjin loss, where drones and robots allowed for a first assessment of exposures despite the exclusion zone around the main blast area.
The sessions on forgotten events and earthquakes in the US will provide participants with food for thought in terms of risk awareness and I'm looking forward to the panel on consumer insights, as well as sharing our success story on developing a flood product for the Italian market.
Making the world a more resilient place is not an easy task, we at Swiss Re are committed to do our part and find new ways to put our capital and knowledge to use in protecting our society, but we cannot do it alone. I am looking forward to a fruitful exchange this Monday, join us in this effort!
You can also join and follow the discussion via #CataSigma16 on Twitter or on LinkedIn.
Category: Climate/natural disasters