Losses from natural catastrophes are rising sharply both in Europe and throughout the world. In 2016, natural catastrophes and man-made disasters resulted in economic losses of USD 175 billion, whereas only USD 54 billion were covered by insurance. This is a protection gap of USD 121 billion! This places a significant and increasing burden on the public sector and individuals.
However, the role insurance industry plays in helping communities get back on their feet following such disasters could be far stronger if it were able to join forces with the public sector. Let's be realistic! On their own, insurers cannot hope to bridge a protection gap that is becoming ever wider. The public sector is asked to play a more active role in enhancing resilience by building resilient infrastructure and creating the legislative framework for insurance to work.
At an event hosted by Jean-Jacques Henchoz in Brussels, stakeholders from client companies, the EU Commission, the EU Parliament, Member States and the academia discussed how public-private partnerships can help make the society more resilient. The discussion focused on what kind of Nat Cat schemes are already successfully in place and what learnings from other regions in the world could be transferred to Europe.
The conference report "Insuring natural catastrophe risk: How public-private partnerships could make Europe more resilient" is now available on Swiss Re's website. The report provides an interesting insight into successful public-private partnership initiatives on natural disasters from different parts of the world and identifies challenges that need to be addressed in Europe. It shows that there are some promising cases where states have recognized the need to close the growing Nat Cat protection gap and have taken pre-emptive action to tackle the exposure to natural disasters.
As the keynote speaker Rob Whelan, CEO and Executive Director, Insurance Council of Australia stated: "Insurers are at the end of the risk management chain and there are a bunch of other responsibilities that need to be fulfilled on the part of government and the community before insurance can play a role.” While (re)insurers should be responsible for offering efficient natural catastrophe solutions, governments should play an important role in taking action to prevent and mitigate climate risk and establish appropriate market frameworks (incl. incentives) for asset owners.
In close cooperation with insurance industry both parties can provide solutions for customers which are affordable, easy to access and relevant.
Category: Climate/natural disasters: Climate change, Disaster risk, Earthquakes, Floods/storms, Resilience