Catastrophe lessons discussed at forum
A forum to discuss strategies for improving natural catastrophe resiliency and closing the protection gap, which was sponsored by Bermudian-based RenaissanceRe Holdings Ltd, has been held in London.
Titled “Improving Natural Catastrophe Resiliency: Insurance v Intervention”, the forum brought together about 100 leading insurance industry experts, policymakers, scientists and environmentalists to Lloyd's of London.
It brought into focus issues caused by natural catastrophes, such as those seen this year with hurricanes Harvey, Irma and Maria.
Kevin O'Donnell, president and CEO of RenaissanceRe, said 2017 is the third year in the past 15 to see more than $100 billion of insured losses.
“This recent loss activity demonstrates the value of private insurance but also highlights the protection gap,” he said.
Growing the insurance pool and closing the gap in the developed world requires a co-ordinated effort among lawmakers, insurers, reinsurers, academics, scientists and private citizens alike, which is why forums like these are so important.”
The forum covered a number of issues raised by the recent rise in hurricanes, earthquakes, wildfires and other events, including the importance of promoting resiliency before the inevitable next storm; the role of risk-based insurance rates in consumer decision-making; the positive incentives working to drive mitigation efforts in urban environments; and the role of the private sector in boosting rebuilding and local economies following a disaster.
John Huff, former president of the National Association of Insurance Commissioners and former director of the Missouri Department of Insurance spoke about the unintended consequences that occur when intervention makes matters worse, offering insights into how lessons learnt from past mistakes are helping to inform current actions.
He said: “The success of any resiliency planning effort depends on co-ordination and education.
“All of us, from regulators to insurers, to businesses and consumers, have a role to play in this process. Efforts such as the Risk Mitigation Leadership Forum Series play a pivotal role in helping to educate people and communities around the world about the importance of risk mitigation and adaptation.”
Aidan Kerr, director of operations for Flood Re, shared examples of best practice for partnerships between the public and private sectors to make flood insurance more available and affordable.
“Flood Re is committed to providing information to improve people's understanding of their flood risk and how they can take action to manage and reduce their risk,” he said.
“Thanks to the establishment of Flood Re there is now a greater choice of affordable home insurance policies for householders at risk of flooding.
“Our mission is to help Government, local authorities, insurers and communities to work together to become better prepared for future flooding. To transition to a risk-reflective model by 2039, we need a wide-ranging and inclusive approach encompassing land planning, sustainable drainage, sustainable development and effective flood risk management.”
Meanwhile, Stephen Weinstein, group general counsel of RenaissanceRe and chairman of the RenaissanceRe Risk Sciences Foundation, the lead sponsor for the forum, said: “The large natural disasters we've seen in 2017 underscored once again the value of investing in both financial and physical resilience.
“Research consistently shows that every $1 spent in risk mitigation saves $4 in recovery, and better preparation clearly saved both money and lives in 2017.”
He added: “We know that the next major natural disaster is not a matter of if, but when. We also believe that economic and life safety risks are growing due to factors including sea level rise, demographic changes, and economic growth in high-risk regions worldwide.
“RenaissanceRe remains committed to partnering with multiple stakeholder groups to better understand and develop solutions to help communities enhance preparation for and recovery from disasters.”