Asia has already suffered over $2bn in economic losses due to NatCAT events in just the first five months of 2019. While experts have been pointing out the link between the rise of NatCAT events and climate change, the more pressing question is how the population centres of Asia - notorious for being disaster-prone - can improve resilience over the next few years.
Between 2000 and 2018, 84% of people affected by natural hazards were living in developing Asia according to Asian Development Bank figures. The region accounted for 55% of the global disaster death toll and for 26% of global damages. In the period from 1970 to 2019, the region lost $1.5tn due to natural disasters, while the estimated costs of damage from these catastrophes as a percentage of GDP continues to rise.
The protection gap was also found to be the highest in emerging Asian countries regarding natural catastrophes with the share of uninsured property catastrophe losses caused by storms, floods and earthquakes being above 90% in these countries.
Last week, during the Global Insurance Forum (GIF) held in Singapore, chairman of Insurance Development Forum (IDF) Denis Duverne, who is also AXA Group chairman, called for accelerated public-private collaboration to achieve this end. “We need to drive concrete significant measures to extend the use of insurance and related risk reduction capabilities to help build greater resilience to climate risk and natural catastrophes in countries where it is needed most,” he said.
Regulators
Also during the GIF, Australian Prudential Regulation Authority (APRA) executive board member Geoff Summerhayes said, “The level of economic structural change needed to prepare for the transition to the low-carbon economy cannot be undertaken without a cost. But it’s also true that failing to act carries its own price tag due to such factors as extreme weather, more frequent droughts and higher sea levels.”
“When a central bank, a prudential regulator and a conduct regulator, with barely a hipster beard or hemp shirt between them, start warning that climate change is a financial risk, it’s clear that position is now orthodox economic thinking,” Mr Summerhayes said.
Asia Nat CAT & Climate Change
Find out more about how the insurance industry is helping to deal with the increasing severity and frequency of Nat CATs at Asia Insurance Review’s Asia Nat CAT & Climate Change Conference, to be held in Jakarta on 2-3 July. Click here for more details.