The Earthquake in Tanzania on the 10th September which left 16 people killed, the 253 people injured and the thousands whose home have been damaged or destroyed is an important reminder of the misconception that Africa has no earthquake exposure. Although African earthquakes tend not to garner the same international attention as those elsewhere – the Tanzanian earthquake is neither unexpected nor has it gone unnoticed.
Swiss Re's CatNet® clearly shows that the Rift Valley area of eastern Africa is quite exposed to regular moderate earthquakes. Although, the region's risk is clearly very limited when compared to the neighbouring regions around Turkey, Iran or Pakistan - we should not be lulled into a false sense of security and false risk perception about earthquakes – and natural catastrophes in Africa.
The US Geological Survey reports that Tanzania’s largest recorded historic earthquake was a huge M 7.2 event in 1919. In recent times, the magnitude 6.8 earthquake in December 2005 resulted in half a dozen or more fatalities. Algeria and Morocco are especially exposed to large earthquakes.
It is simply wrong to equate comparatively-low exposure with no-exposure.
We are aware that there is an insurance protection gap in most Africa regions. But when it comes to natural catastrophes, the size of that gap is severely underestimated. The 2005 Algerian earthquake caused an estimated economic loss of well over USD 6.5 billion (in 2016 terms). Of this massive loss, only about USD 43 million was covered by insurance, this equates to a massive insurance protection gap of 99.3% of the economic loss.
In terms of public perception, drought and the resulting food shortages are the most well-recognised natural catastrophes on the continent. Recent years have justified this. For 2015, the largest event Nat Cat event in Africa was the drought in southern Africa. This led to economic losses of well over half a billion US dollars in 2015 alone – and is still ongoing in many regions.
Insurance protection exists for some of the larger commercial farmers in countries like South Africa. However, as a rule smallholder farmers have to bear the vast burden of these losses out of their own pockets. The protection gap in this sector of the community is something we have been working hard to close. For example, microinsurance programmes based on satellite data and mobile distribution have gained a lot of traction in eastern Africa – and are being up scaled and replicated elsewhere. We can be proud of what we have achieved so far – but there is still a very long way to go.
Besides natural catastrophes, the high-profile Ebola outbreak has shown that the continent has a very high exposure to severe pandemic shocks. I am proud to have seen that the insurance industry has been quick to rise to the challenge on this topic. The development of a pandemic bond that can be triggered to allow funding for future pandemics is a great example for how a multi-stakeholder approach can being employed to get large populations covered by insurance.
Making societies financially resilient to pandemic and Nat Cat shocks is essential for protecting economic growth. As an industry we shouldn't be satisfied that 99% or more of Nat Cat losses are simply not insured. The insurance function is to protect houses, cars, businesses, governments and families - so that when disaster happens people can quickly can return to as normal a life as possible.
I believe it is critical that we keep that purpose in mind, especially in this exciting and fast growing region where we have so much to gain, but where so much is at stake if we get it wrong.
Category: Climate/natural disasters: Disaster risk, Earthquakes, Resilience