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Currently showing: Funding longer lives > Health/medicine

06 Nov 14 23:00

This week, I had the great fortune of participating in the very first Chief Resilience Officers' Summit as part of the 100 Resilient Cities Initiative pioneered by the Rockefeller Foundation. This gathering of the first group of CROs from Byblos to Christchurch to San Francisco and beyond shows that cities are taking natural disaster and other risks and how they affect urban resilience very seriously.

We discussed a variety of topics, but two concepts stood out to me, which when we dig deeper may be on a collision course: the blue tsunami and the silver tsunami. Let me explain.

To become truly prepared and resilient our cities must become capable of quickly bouncing forward after a disaster. While there is opportunity in an increasingly interconnected world, there are also grave risks. Few places highlight this growth in exposure more than a city like Shanghai.

If you compare snapshots of Shanghai's skyline in 1990 to today, you'll be shocked. The only distinguishable similarity is the river that meanders through the city — the Huangpu River. It's the only thing that has remained the same in twenty years. What has changed are the number of people and assets on its banks.

With this scenario being repeated around the world, the losses from natural disasters and climate events will grow. Since the turn of the century, natural disasters have destroyed over USD 2.5 trillion worth of economic progress. This is the"blue tsunami," the wave of economic impact these natural and climate events will have on a city's ability to protect progress. With current trends, cities will have to absorb a greater proportion of the economic losses from these shocks.

But there's another tsunami on the way. This is the "silver tsunami." Our aging population is a "silver tsunami" that is approaching every part of the globe. With medical and societal advancements, we can expect to live much longer lives. This has its obvious benefits. By the year 2045,there will be more people over the age of sixty-five than people under the age of fifteen. But what new risks come with this longevity?

This aging population will require greater social services, pensions and medical care which have substantial costs associated with them. Meanwhile, the number of working people will proportionally decrease against the number of people they will need to support. In Asia and Latin America, the population over sixty-five is expected to grow by 100% or more by 2030. At the same time, in Europe, the working age population is expected to drop by nearly 10% over the same period. With this, governments will see drops in tax revenue which has been the primary funding source for many successful projects.

How will we fund longer lives,larger pensions, more medical care for the elderly, while simultaneously paying for shocks like floods and earthquakes? No where will the convergence of these two distinct tsunamis be felt more than in our cities. Resilient cities must make economic resilience a centerpiece of their long-term strategies and implement comprehensive financial and risk transfer plans to reduce the expected budgetary volatility. Without these plans, cities will be in a constant struggle choosing between safeguarding better livelihoods and allocating diminishing financial resources. The private sector, particularly the insurance industry, can play an important role in making this a reality.

The collaborative nature and incubation of best practices we saw this week creates tremendous opportunity. Swiss Re is excited to work with these cities and I am hopeful that not only will this mindset spread to cities around the globe,but we will be able to say there is a new tsunami on the horizon, the"resilience tsunami."

Category: Funding longer lives: Health/medicine, Long-term care, Longevity risk, Pension/retirement, Climate/natural disasters: Climate change, Disaster risk, Earthquakes, Floods/storms, Resilience

Location: New Orleans, LA, United States


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