Swiss Re published the much-awaited yearly sigma study on natural catastrophes last week. The highlights: In 2013, there were 308 disaster events, of which 150 were natural catastrophes and 158 man-made. Almost 26000 people lost their lives or went missing in the disasters. Haiyan was the largest humanitarian catastrophe of 2013, killing around 7500 people and leaving more than 4 million homeless. The biggest insured losses came from large scale floods in Europe, accounting for over 4 billion USD. But this year's NatCat sigma was different.
The 2013 NatCat sigma looks beyond the stats to see what the aggravating factors are and what can be done. An important contributing factor to the overall costs is the marked increase of wealth accumulation and settlement in areas highly-exposed to severe weather events. Another one is climate change. As weather-related events become more frequent and more severe, insurance and reinsurance companies are very seriously looking at how to foster climate change resilience. And while emergency preparedness and disaster risk management progressed, there is much more we can do.
The good news, however, is that up to 68% of climate change risks can be avoided with cost-effective adaptation methods. And, alongside local prevention and mitigation measures, risk transfer to re/insurers is a powerful adaptation measure to offset the impact of extreme weather events. See page 17 onwards in the publication.
A refreshing approach being taken in the industry is Zurich's flood resilience program, which uses lessons learned from the European floods to reduce future flood risks. Based on their observations, Zurich highlights the following measures to make communities more flood resilient:
- Improving risk awareness, e.g. Flood maps should be widely available, and used in planning new construction.
- Physical barriers such as levees and flood walls can help but other means of protection should be considered, such as flood water retention areas along rivers.
- Rebuilding structures with improved flood resilience.
The insurance industry can play an important role by providing expert advice on adapting structures to make them able to withstand floods, and mitigating risks. In countries such as Germany, where due to low insurance penetration for natural hazards, only a fraction of flood losses were covered, the government has offered EUR 8 billion to compensate property holders who suffered flood damage. New alliances among insurers, governments and civil society could encourage risk reduction and risk financing in both the public and private sectors. Alternative financing means, including cat bonds, could also play a role. Read the full report from Zurich here.
What other great initiatives do you know of that can help improve flood resilience? I look forward to your comments, which you can add below. And if you want to learn more about floods, do check out this award-winning flood app.
Category: Climate/natural disasters: Disaster risk, Floods/storms