Building resilience to natural catastrophes
Market Insight 17 April 2018 17 April 2018
The natural catastrophes that buffeted the world last year broke records for losses, with the Atlantic hurricane season alone the most expensive since 2005. As well as financial losses suffered by individuals, businesses and insurers, these events have brought into even sharper focus the challenges that climate change brings to communities across the world.
Not only are climate-related catastrophic events becoming more frequent and more severe, but rapid urbanisation is making some of the worst affected places (coastal areas and developing countries) less rather than more resilient to these events.
What is the role of insurance in helping to close the protection gap and how can innovative new models of risk transfer such as parametric insurance can help?
I believe that the impact of climate change can be lessened through better and more innovative modelling, measuring and management, and regulation might be able to help this.
I also feel urban planning, infrastructure development and innovative urban construction and engineering can help build resilience into the world's rapidly expanding cities.
It's my view that building resilience to climate change related risks will involve a complex mix of insurance, regulation, government incentives, sophisticated climate risk modelling, together with smarter construction and urban development.