The year in numbers: how expensive was the extreme weather of 2018?
Wildfires, hurricanes, typhoons and other severe weather events contributed to the USD 165 billion in total economic losses worldwide. With just over half of that (USD 85 billion) insured, we are now looking at a protection gap of USD 80 billion. According to sigma, explanations for underinsurance include lack of consumer risk awareness, a poor understanding of the catastrophe cover available, and hesitation on the side of the industry to provide cover where risk assessment is uncertain.
But what specifically is making us more vulnerable to disasters? The temperatures are getting warmer and the trend of living in more urbanised communities where our assets are highly concentrated (and exposed), has been on the rise. Compared to two decades ago, the likelihood of extreme weather affecting a densely populated area is significantly higher, which means we are less resilient than before.
Despite the rise in secondary perils, single natural catastrophe events continue to cause vast devastation and disruption to the affected areas. The costliest events of last year included California's Camp Fire, Hurricane Michael and Typhoon Jebi in Japan. Each one of those impacted local infrastructure and interrupted business activity in the area. Even in the case of existing coverage, the financial strain of each natural disaster is usually substantial enough to linger on for several years.
Swiss Re solutions
Without a doubt, the speed of getting to the funds to start the recovery efforts is a much-needed lifeline. Parametric (or index-based) products – often simpler and more transparent in their wording – may lessen the stress of business interruption immediately after a Nat Cat event, increasing our resilience after natural disasters.
To download the latest Swiss Re Institute sigma, click here.
To find out more about Swiss Re Corporate Solutions parametric offerings, click here.
To learn more about our solutions on closing the protection gap, click here.
Swiss Re Corporate Solutions provides risk transfer solutions to large and mid-sized corporations around the world. Our innovative, highly customised products and standard insurance covers help to make businesses more resilient, while our industry-leading claims service provides additional peace of mind.
Product scope – Our Specialty cover for UK and ROI clients includes Marine, Aviation, Financial lines, Healthcare, Political Risks, Credit and Surety, Power and upstream/downstream energy, Weather and Agricultural solutions.
Financial strength – Our strong financial ratings include “AA-” by Standard & Poor’s, “Aa3” by Moody’s and “A+” by A.M. Best.
Knowledge – We have extensive risk knowledge and a wealth of experience in a wide range of sectors which enables us to offer thought leadership and guidance as well as insurance.
Capacity – Our large net capacity enables us to underwrite some of the largest risks across a broad spectrum of industries.
Innovation – we have a proven track record of developing innovative risk solutions, including parametric covers, NDBI coverage, weather solutions and reinsurance of corporate captives.
Global – In the UK, we have over 165 employees serving clients and brokers from offices in London and Manchester. Swiss Re Corporate Solutions has over 50 offices in more than 20 countries.
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