九色视频

The re/insurance industry is not only a major provider of capital for disaster risk finance and insurance (USD 580 billion of reinsurer capital available according to AON, in 2019), it is also a source of technical knowledge which governments can benefit from. The industry’s risk analysis and evaluation, coupled with its risk management skills, can help countries prioritize and execute effective measures in preparation for disasters, thereby increasing their resilience. 

The 6.4 magnitude earthquake that struck central Croatia in December 2020 extensively damaged buildings and infrastructure, including the region's largest hospital and other healthcare facilities. 
Recent events like this demonstrate how various risks, such as climate change, natural catastrophes and pandemics, can compound and amplify each other.

Given the disproportionate impact of climate change and natural disasters on developing economies, these represent a particular focus for the insurance industry in relation to efforts around adaptation and resilience. In this sense, gatherings like the Business of Resilience Conference 2021 being organized by the UK Department for International Trade in March and the COP26 in Glasgow this November represent a chance to engage with possible partners to drive further engagement and action.

The challenges

An obstacle to delivering the benefits that the industry offers to developing countries is the slow take-up of insurance. The "insurance protection gap"--that is the difference between total economic losses and insured losses--persists. According the Centre for Risk Studies at the Cambridge University Judge Business School (CCRS), the percentage of direct losses from natural disasters covered by insurance averages around 40% in developed countries, 10% in middle-income countries, and below 5% in low-income countries. Meanwhile Swiss Re puts the 10-year average size of the global protection gap at USD 137 billion.

The challenge faced by governments in developing countries include building up healthy private insurance markets and directly becoming insurance buyers (macro insurance); both take time and resources. The process involves developing know-how locally: not only to decide which risks should be mitigated, borne with their own reserves or transferred to the private insurance industry, but also to understand their own risks and how to become an effective insurance buyer. 

While these challenges to expanding the use of insurance may seem daunting to developing countries, they can and are being addressed with support from the insurance industry and a range of organizations looking to increase countries’ resilience.

The misconceptions

In addition, insurance is sometimes seen as requiring all data to be in place before being considered and, simply as a funding source offering help after a natural disaster occurs. This is no longer the case.

Technological advancements and innovations are helping re/insurers address some of the challenges that have perpetuated the protection gap. The benefits here are twofold.

First, the industry can now have easier access to greater volumes and types of data and vastly improved capabilities to analyse and understand different hazard risks. That, in turn, helps re/insurers create even more relevant insurance solutions that enable early action and resilience: for instance, parametric or index-based policies.

Parametric insurance is based on an independent parameter or set of parameters closely correlated with expected losses/damages. These are objective factors such as rainfall, temperature, wind speed or seismic magnitude. Claims payments are triggered automatically once an agreed-upon threshold is reached. 

For slow-onset events such as drought, the early warnings enabled by parametric insurance can allow time for early action adaptive behavior such as planting different types of seeds, buying feed for animals to replace failing crops or providing emergency aid, before a disaster occurs. For more rapid onset events, such flash floods or earthquakes, fast payouts from parametric insurance products can help support a rapid disaster response and prevent the compounding effects of prolonged crisis situations.

Second, technological innovations are simplifying key elements of the insurance value chain. Historically cumbersome processes, for instance in distribution and claims management, have been important factors limiting the development of stable, reliable local insurance markets in developing countries. As new tools and technologies streamline these processes, using insurance is becoming more efficient. 

The value of insurance

Transferring risk to the private insurance market is a cost-effective mechanism for financing the least frequent, most severe risks (events that happen less often but exact heavy tolls) and for increasing resilience. 尤物视频can enable the fast, effective distribution of funds and thus lessen the shocks to a country's budget, thereby limiting its post-disaster debt levels as well as its need for ex-post financial aid.

Most important, places with higher insurance penetration recover faster after disasters. 

That is a key finding from the comprehensive report “Optimizing Disaster Recovery – The role of insurance capital in improving economic resilience” that the Cambridge University Centre for Risk Studies (CCRS) and 九色视频recently published. For this research, CCRS assessed the impact of re/insurance on the speed and quality of recovery following climate disasters and earthquakes. Specifically, CCRS evaluated an extensive dataset on 103 natural catastrophes that occurred over the last 30 years in countries across the world, including mature and developing economies.

CCRS' analyses confirmed the hypothesis that insurance positively impacts the speed and quality of disaster response and recovery efforts. Its key findings include:

• Each percentage point increase in insurance penetration (non-life premiums divided by a country's GDP) reduces recovery times by almost 12 months.
• In countries with high insurance penetration, recovery rates average less than 12 months. In contrast, in countries with very low insurance penetration, they extend for more than four years.

Build Back Better

In addition, insurance programmes that include a ‘build back better’ element enable governments to increase the resilience of physical structures as part of reconstruction after disasters. For example, re-building to better construction standards in relation to the impacts of earthquakes and/or typhoons, whether this be for public housing, schools, hospitals or roads and bridges.

The opportunities 

Recognizing the challenges posed by the impacts of climate change and the protection gap in developing countries, over the last five years or so, the re/insurance industry has come together in unprecedented ways to expand and scale up the use of insurance in developing countries.

Often based in London due to the UK insurance market's significance, several organizations have been created that bring together the private re/insurance industry, multilateral organizations, non-governmental organizations, and public sector institutions with a common objective: optimising and extending the use of disaster risk finance and insurance to build greater resilience and protection for countries vulnerable to climate change and natural disasters. 

They include, for example, the (IDF), an industry-led public-private institution, and the created by the UK Government, which works together with partners such as the IDF or Germany’s (IGP).

These organizations are focused on driving concrete action and working together to provide training, (especially in the area of risk analytics); tools and concrete projects to enable developing countries to benefit from the protection and increased resilience that insurance can afford.

A good example is the Tripartite Agreement, which brings together the risk modelling, risk management skills and capital commitments of the insurance industry members of the 尤物视频Development Forum, along with the UN Development Program's development finance know-how, and funding by Germany's Ministry for Economic Cooperation and Development. With involvement from re/insurance industry teams based in the UK, Europe and across the world, the programme aims to deliver technical assistance and insurance solutions to 20 developing countries vulnerable to the impacts of climate change by 2025.

In sum, the re/insurance industry is committed to working with the public sector, multilaterals and other partners to address developing countries’ challenges to using insurance. The value that insurance can deliver to provide protection and promote physical and financial resilience make it an important option to consider in countries’ budget and risk management planning.

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