A recent study by Swiss Re revealed that a 1 in a 100 year earthquake event today may cause a USD 12 bn loss to property and infrastructure assets in the city of Jakarta. However, only about USD 1 bn would be covered by insurance leaving a USD 11 bn gap in insurance protection. At the current growth rate of infrastructure and real estate investments as well as the increased concentration of property values due to urbanisation this gap may widen to USD 31 bn by the year 2023. For flood risk the protection gap for a 1 in a 100 year event is estimated to be around USD 25 bn by 2023 even when considering a gradual increase of insurance penetration.
In order to reduce this gap, zones of high hazard need to be identified (see also www.swissre.com/catnet), effective risk mitigation measures to be established and properly maintained, building codes enforced and applied as well as affordable and sustainable insurance solutions to be offered and implemented in collaboration with private and public partners. This will lead to stronger resilience of the society and economy in case of natural disasters. How else can our industry support this undertaking?
Category: Climate/natural disasters: Disaster risk, Earthquakes, Floods/storms
Location: Jakarta, Indonesia