Connections recognizes the importance of keeping current with industry trends to better prepare your business and your clients for the future. See below for excerpts from Connections articles that pertain to natural disasters and insurance.
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According to the ClimateWise Principles Independent Review 2016, over just the past 30 years, the gap of uninsured or underinsured assets has increased fourfold. That’s a measurement to which you should probably give your attention.
It’s no longer wise to dismiss climate risk for those in the insurance industry. The rising impact of climate risks has resulted in a dangerously high ‘protection gap’ in the global insurance sector, due to increasing natural disaster damage. This gap indicates the difference between total economic loss and the value of insured assets. Thirty years ago, it was $23 billion. In 2016, it rose to a staggering $100 billion.
Tom Herbstein, ClimateWise program manager, believes that the traditional insurance response — reassess, re-underwrite and reprice — is no longer serving the industry well.
“It [the insurance industry] is repricing itself out of risk, but it is not addressing the root cause of the problem, which is that society is increasingly vulnerable to climate risks and is in need of enhancing its resilience,” Herbstein explains. “If our response to climate change is limited to avoiding exposure rather than managing risk, then collectively we all fail and the protection gap I alluded to actually grows.”
To see three ways in which insurers can support climate resilience, log in to Connections.
Global Disasters in 2016 combined to cause economic losses of $210 billion (USD), according to Aon's 2016 Annual Global Climate and Catastrophe Report. Just 26 percent, or $54 billion (USD), of overall economic losses caused by these disasters were covered by insurance, as a higher percentage of damage occurred in areas with a lower insurance penetration. The report states this is the highest insured loss total since 2012. From major earthquakes to catastrophic flooding to devastating hurricanes, natural disasters and climate change continue to play a major role in shaping the insurance industry.
To take a closer look at the natural disasters affecting people worldwide and their impacts on global insured losses in 2016, log in to Connections and download our latest infographic.