Ernst Rauch: Four out of five global risks highlighted at Davos were environment-related
Earthquakes 2011: The toll
Walter Stahel: Good management of scarce resources is essential to risk management
Scott Ryrie: Singapore’s funding of flood research a good example of public-private cooperation
The most expensive earthquakes took place last year. Earthquakes and the resultant tsunamis, landslides, and ground settlements, caused US$365 billion in economic losses throughout the world. There were at least 133 quakes. A total of 20,500 people died, and about a million people lost their homes.
Public-private partnerships There is also a need for more publicprivate partnerships (PPP), seminar participants say. Scott Ryrie, former CEO of Allianz SE Reinsurance Branch Asia Pacific, Singapore, cited the Monetary Authority of Singapore’s (MAS) funding of Nanyang Technological University (NTU) research on tackling floods here, as an example of how government and industry communication is growing. Another case in point is the •
The summit was organised by Asia Insurance Review, sponsored by Sompo Japan, and supported by Climate Wise, International Actuarial Association, General Insurance Association, German Development Cooperation and the National Climate Change Secretariat (NCCS) under the Singapore Prime Minister’s Office.
Japan Tohoku earthquake and resulting tsunami on March 11 Economic loss: US$335 billion loss Deaths: 19,300 Rendered homeless: 450,000
New Zealand
way Japan’s insurance industry is structured. For claims less than 115 billion yen (US$1.5 billion), the private sector is fully responsible. Between 115 billion and 871 billion yen, the government bears 50% of the risk. From over 871 billion to 5,500 billion yen, only 5% is borne by the private sector, with the rest underwritten by the government. During the 2011 earthquake and tsunami, total claims reached 1,200 billion yen, with the government rescuing the Japanese insurance industry from financial ruin. The private sector need not wait for national governments to come to an agreement with respect to adaptation. Though yet to make an impact on the kind of scale required, innovative private sector solutions are leading the way, examples being the Weather Index Insurance (WII) and CLIMBS by Munich Re. CLIMBS, which stands for “Philippine Cooperative Insurance Company Coop Life Insurance & Mutual Benefit Services” is owned by 2,000 primary cooperatives and provides micro-insurance to farmers against extreme weather events in the Philippines. This is underwritten by Munich Re, with independent consultancy DHI providing real-time data on weather events. Given the increasing exposure to climate change, a robust insurance industry is truly essential when that next rainy day arrives.
The following were the hardest hit:
or get excluded from coverage. This will translate into increased costs for businesses and for individuals. It is also important that when long-term infrastructure is built, it is made floodproof, something that may not have been necessary a few years ago. Another thing that cannot be ignored is the increasing scarcity of raw materials, according to Walter R Stahel, vice-secretary general of Risk Management Research of Geneva Association, Switzerland. The association is a think tank of 90 of the biggest insurance companies, analysing global risks that could affect the industry. “The economy is the biggest producer of carbon dioxide. The linear throughput model which relies on cheap commodity prices doesn’t make sense any more. If manufacturers begin to realise how much more expensive commodities will be ten years from now, retaining resources will become the most profitable business model. Cradle-tocradle systems coupled with rental or operational leasing of products will have to happen. This will reduce GHG emissions by a substantial amount, without anything else changing,” Stahel says.
Earthquake near Christchurch, February Economic loss: US$20 billion Deaths: 185 Other casualties • Turkish region of Van • The region of India-Nepal-Tibet • Chinese provinces of Yunnan and Xinjiang • US state of Virginia 2010: For comparison: The devastating earthquake in Haiti caused about 137,000 casualties. Between one and two million people lost their homes. Sources: James Daniell, Centre for Disaster Management and Risk Reduction Technology (CEDIM) of Karlsruhe Institute of Technology (KIT); Radio New Zealand Provided by Helmholtz Association of German Research Centres