Economic losses from disaster events in Asia were an estimated USD 31 billion in 2017, of which only USD 5 billion were covered by insurance. A majority of the losses resulted from flood events such as Tropical Storm Tembin (Vinta) in Mindanao which caused close to 20,000 people to lose their homes and total damage amounting to USD 47 million. For a location that is highly exposed to cyclonic risks, this is the latest in a long succession of damaging storms in the Philippines. Some other examples included Typhoon Hagupit in 2014 and Typhoon Haiyan the previous year, which highlight the strong need for adequate risk mitigation and financing mechanism to help the country to reduce losses and expedite recovery from natural catastrophes.
Swiss Re's 50th anniversary sigma report "Natural catastrophes and man-made disasters" shows that globally, 2017 was a big year for losses caused by natural catastrophes and man-made disasters, with total insured losses amounting to USD 144 billion. The year saw global catastrophe claims reach the highest ever level for a single year and total economic losses amounted to USD 337 billion. That’s a USD 193 billion gap looking for solutions to improve protection for people and businesses.
Clearly, there is an urgent need within the industry to find ways to close this large risk protection gap, and vast improvements in data analysis technologies in recent years have made that possible. We believe that a core part of the solution will lie in how we use data to more accurately measure risk and develop solutions that support quick disaster recovery, providing effective ways for people to manage disruptions and get back on their feet in the aftermath of a catastrophe event.
For instance, we constantly reach out to our clients and provincial governments to understand the local markets' needs, and we know that speed and cost-efficiency are the two biggest priorities during catastrophic events. Innovative use of data analytics and parametric models can help cities and provincial governments provide more affordable and accessible solutions to recover and rebuild quickly. The recent partnership between Japan and ASEAN to set up the Southeast Asia Disaster Risk Insurance Facility is an initiative to provide such support to the region.
Coming 6-9 May, I will be attending the 29th East Asian Insurance Congress (EAIC) in Manila. The event features a theme on "Managing Disruptions, Driving Change", which I see as an opportunity to have interesting conversations about how Swiss Re can work with our clients to support the region's capability in coping with natural catastrophes through different solutions.
At the same time, we can also look at the macroeconomic changes and the disruption that it can bring to the region, and our strategy to address them. Asia is experiencing rapid development and with growing economic integration in the region, we can anticipate a greater demand for re/insurance solutions that capitalises economies of scale while balancing the complexities of multi-country covers. The key lies in building up a solid knowledge of the market and its needs, and applying good risk assessment expertise. The better we understand the risks, the more capable we are in enabling growth and ensuring safer lives.
Come join me for a chat at the EAIC.
Category: Climate/natural disasters: Disaster risk, Floods/storms, Resilience