Worsening local weather disaster stresses significance of insurance coverage


Since 2017, the (re) insurance market has had weather-related losses of more than 10 billion.

Wildfire is a threat that has seen some of the most significant developments. Worldwide insured damage from forest fires rose by an alarming 500% between 2010 and 2019 – the first two years of which have already doubled compared to the previous decade.

“The pace of change over a relatively short period of time begins to move the (re) insurance market. The significant shift in claims experience is forcing insurers and reinsurers to rethink their risk assessments, ”the statement said. “Howden’s research shows that those who expect a return to yesterday’s loss totals are likely to be disappointed: the past is not a guide to the future of climate-sensitive threats.”

The report highlights the link between extreme weather events and higher insured catastrophe losses, which requires increased insurance needs. However, accessibility is a persistent problem for many.

Emerging markets with lower insurance penetration rates and a higher risk of falling GDP are at the end of the worst climate change.

The report compares two markets: New Zealand recovered in 18 months from a series of earthquakes in 2010, but Mozambique failed to return to its pre-flood GDP after severe floods in 2000.

David Howden, Howden Group’s Chief Executive Officer, highlighted the importance of rebuilding insurance models for a more balanced response to climate change that includes the world’s most vulnerable populations.

“The power of insurance in both breaking down barriers to moving to a lower carbon future and picking up the debris in the event of a disaster is immense,” Howden said. “However, we cannot continue with a model that only protects those who can afford it.”

To make matters worse, the humanitarian funding gap has grown from less than $ 1 billion two decades ago to $ 4 billion a decade ago to over $ 20 billion today.

“Traditional methods of funding disaster relief cannot keep up with demand, and existing risk-transfer products cannot fill the protection gap,” said Charlie Langdale, howden’s director of climate risk and resilience. “The scale of the problem calls for something far more imaginative and innovative, something that will redefine disaster relief funding with insurance at its core.”

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