It is with mixed feelings that I read the BBC news that Ecuador's government will raise taxes to help pay for Earthquake damage from the huge 7.8 Earthquake that happened on 16 April. Mixed feelings because – on the one hand – we need to applaud the government's efforts to address the financing challenge to support the recovery efforts. On the other hand, the need for the government to take tax measures post the earthquake is a painful reminder of the massive protection gap that exists in Ecuador and many other parts of the world.
But some countries are much more advanced in their disaster risk financing strategies. Let me just mention two examples here: the government of Mexico that has developed and implemented a comprehensive disaster risk financing strategy over the last 20 years. 16 governments in the Caribbean have joined the Caribbean Catastrophe Risk Insurance Facility (CCRIF) to get quick insurance payouts in case of a major earthquake or hurricane.
I strongly believe the best way to achieve a resilient society in the face of natural catastrophes is to have a pre-funded disaster response. Insurers and reinsurers can provide the financial backing to set up insurance programmes across the entire social spectrum. In recent years, we have proven that we can make this work. We have helped governments to protect their budgets. We offer the private sector protection along their entire value chain, and we have make giant steps to getting micro insurance to low-income communities in a sustainable way.
But the sad truth is more needs to be done. Globally, around 70% of the world's catastrophe losses remain uninsured. This figure includes losses from the relatively well-insured markets in North America and in Europe. If you look at events such as the Nepal earthquake this time last year, 99% of the losses were not insured. We need to close this protection gap – in Ecuador as well as in other parts of the world. This can only be achieved by building strong partnerships between private and public bodies.
It cannot be done with the existing off-the-shelf solutions – we as insurers need to do more to tailor products and services to suit the needs of specific regions and stakeholders – from individuals to governments. We need to be innovative, embracing technology to develop and deliver more suitable, accessible and affordable forms of insurance. We also need to engage better with beneficiaries to make them aware of the role insurance plays in their own overall efforts to build resilience.
I applaud the words of Ecuadorian President Rafael Correa in the wake of the disaster: "Society is built with institutionalised commitment, with organised collective action." We want to – and can - be a part of that organised, collective commitment!
Category: Climate/natural disasters: Disaster risk, Earthquakes, Resilience