ZURICH--(BUSINESS WIRE)--Leading international insurance think tank The Geneva Association has today issued a report that proposes solutions to the considerable protection gap that exists for flood losses in Asia.
The report, Insuring Flood Risks in Asia’s High Growth Markets, outlines the rapid pace of economic growth and urbanisation in Asia and the projections for its acceleration in the coming decades. The region’s economic rise has translated into a massive increase in asset values and their concentration in areas prone to flood risks.
Climate change model projections indicate that precipitation extremes in warmer climates are more likely to occur as warmer oceans create a warmer and wetter atmosphere that contains more energy. One result is that flood events in Asia will continue to increase, not least as a result of rising sea levels. By the end of the century, according to the World Bank and OECD, 147 to 216 million people in Asia are projected to live on land that will be below sea or regular flood levels. Indeed, by 2070, Asia is expected to account for 50 percent of all global assets exposed to flood risk.
No single system can adequately address these risks. Current flood defence systems are inadequate with Asia’s annual flood losses having potential to grow to US$500 billion by 2050 based on current defence systems. For insurers, there is consensus that, due to their many facets, flood risks are more difficult to insure than other natural perils.
In this report The Geneva Association analyses the implications of the growing flood risks in Asia and suggests solutions involving insurers and capital markets as well as local governments to address this rapidly growing threat.
Michel M. Liès, co-Chair of The Geneva Association’s working group on the protection gap and Swiss Re Chief Executive Officer said: "While the timing of any natural catastrophe is unpredictable, preparing for one can and should be a regular and ongoing activity. Extending the reach of insurance is a vital part in this effort. Such preparation helps individuals, businesses and governments to get back on their feet more quickly after a disaster strikes. It helps protect hard-won development gains and minimises the destructive harm of any event to economic growth. Over the past decades, the occurrence of natural catastrophes seem unfortunately on the rise, while the share of losses that are covered by insurance has been decreasing. Broadening the reach of insurance - especially across the developing world - will be a critical issue for years to come."
Inga Beale, co-Chair of The Geneva Association’s working group on the protection gap and Chief Executive of Lloyd’s commented, “The insurance and reinsurance industry can play a significant role in helping to identify, assess and mitigate flood risks. It also has an important role compensating firms and individuals for losses incurred, helping to rebuild infrastructure and communities. A precondition of this support has to be a conducive regulatory and free trade environment that enables the industry to provide insurance cover.”
“In the absence of meaningful insurance cover, the cost of relief and reconstruction after floods falls on governments, non-governmental organisations and ultimately on the affected institutions and individuals,” added Anna Maria D’Hulster, Secretary General of The Geneva Association. “Addressing the pernicious growth of Asian flood risks will require innovative insurance solutions and more effective collaboration between the public and private sectors. We are pleased to present this report which suggests a series of solutions that address the current barriers to better flood risk management and insurance.”
For a copy of the report, please click here.
This report is the second in a series on global protection gaps and follows The Global Insurance Protection Gap (November 2014) which presents an overall assessment of the current state of global underinsurance in both the fields of non-life and life and pensions insurance. For more information, please visit our website www.genevaassociation.org
Notes to Editors:
The Geneva Association is the leading international insurance think tank for strategically important insurance and risk management issues. The Geneva Association identifies fundamental trends and strategic issues where insurance plays a substantial role or which influence the insurance sector. Through the development of research programmes, regular publications and the organisation of international meetings, The Geneva Association serves as a catalyst for progress in the understanding of risk and insurance matters and acts as an information creator and disseminator. It is the leading voice of the largest insurance groups worldwide in the dialogue with international institutions. In parallel, it advances—in economic and cultural terms—the development and application of risk management and the understanding of uncertainty in the modern economy.
The Geneva Association membership comprises a statutory maximum of 90 chief executive officers (CEOs) from the world’s top insurance and reinsurance companies. It organises international expert networks and manages discussion platforms for senior insurance executives and specialists as well as policy-makers, regulators and multilateral organisations. The Geneva Association’s annual General Assembly is the most prestigious gathering of leading insurance CEOs worldwide.
Established in 1973, The Geneva Association, officially the “International Association for the Study of Insurance Economics”, is based in Geneva, Switzerland and is a non-profit organisation funded by its members.