Munich Re is one of the world’s biggest
re-insurance groups, covering risks of insurance companies themselves.
In 2012 it produced a map of the world’s most - and least - insured
While the US, Canada, much of Europe,
Japan and Australia have what’s referred to as high insurance
penetration, there are vast swathes of the world, including much of
sub-Saharan Africa, the Indian subcontinent, China and south-east Asia,
which are classed as being either inadequately or only basically
Pay-outs in advance
The east coast of the US is regularly
buffeted by hurricanes. Hurricane Sandy, which struck late last year, is
estimated to have caused $68bn worth of damage in the US. While many US
homeowners are still fighting for their insurance money, at least they
have some cover. If you live in the Philippines or Bangladesh, it’s very
unlikely that any such financial help is available.
A recent survey by Munich Re found it’s
the poorer economies that lose most: on average the lesser developed
economies lose about 2.9% of their gross domestic product each year due
to natural catastrophes, while industrialised counties lose 0.8%.
The big reinsurance groups have been
studying risks associated with climate change for several years and are
now trying to extend their business and come up with plans which will
give some cover to those in poorer regions.
A series of micro-insurance schemes have
been launched around the world, offering financial protection to farmers
and others affected by extreme weather. In many cases policies are paid
out before rather than after such events: when satellites record the
approach of weather patterns - such as a storm or a drought of a
particular and agreed-upon intensity - a policy pay-out is triggered.
Munich Re, in association with local
insurers and other groups, has introduced such schemes in Jamaica and on
other island states in the Caribbean. Swiss Re, another of the big
reinsurance companies, has launched similar schemes in the Tigray region
of Ethiopia and in Senegal, in collaboration with the UN’s World Food
Programme (WFP) and Oxfam. Less than half of one per cent of Ethiopia’s
85m people have any insurance cover.
Insurance analysts say that while those in
poorer regions struggle to afford some form of insurance cover, those in
richer areas exposed to storms and other climate change-related events
are facing big hikes in their premiums.
In the US figures collated by the National
Association of Insurance Commissioners indicate average homeowners'
insurance went up 36% between 2003 and 2010, with premium rates rising
particularly sharply in states round the Gulf of Mexico - a region of
In Florida rates went up by more than 90%,
with many large insurers refusing to cover properties. The state,
concerned about any slowdown in development, has been offering its own
subsidised insurance. The trouble, say insurance experts, is that one
big storm could effectively bankrupt the state.
Meanwhile the federal government, through
its new Flood Insurance Reform Act, is removing subsidies from flood
insurance, meaning ever higher premiums for those living in known flood
Climate News Network]