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Weather Information and Insurance

Weather Information and Insurance. Paul Kovacs Executive Director Institute for Catastrophic Loss Reduction Orlando, January 11, 2002. Overview. Why are disaster losses rising? What can be done, including the role of insurance? What are the weather information needs of insurers?.

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Weather Information and Insurance

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  1. Weather Information and Insurance Paul Kovacs Executive Director Institute for Catastrophic Loss Reduction Orlando, January 11, 2002

  2. Overview • Why are disaster losses rising? • What can be done, including the role of insurance? • What are the weather information needs of insurers?

  3. Overview • Why are disaster losses rising? • What can be done, including the role of insurance? • What are the weather information needs of insurers?

  4. Disasters are a serious threat • 2,800 events during the 1990s • 500,000 people killed • 2 billion people displaced • US$700 billion damage Source: ICLR, based on data from the International Red Cross

  5. Global natural disaster losses billions of 2000 US dollars Source: ICLR, based on data from Munich Re

  6. Why are losses are rising? • The climate is changing • Aging infrastructure • More people and property at risk

  7. Projected extreme precipitation size of event (mm), Canada recurrence time (years) Source: Kharin and Zweirs (2000)

  8. 40 30 20 10 0 1991 2001 2011 2021 2031 2041 2051 2061 2071 2081 2091 Projected sea level change sea level rise in northwest Atlantic (cm) Source: Canadian Climate Change Model

  9. Why losses are rising • The climate is changing • Aging infrastructure • More people and property at risk

  10. Aging infrastructure Source: ICLR, based on data from the Federation of Canadian Municipalities

  11. Infrastructure spending Source: ICLR, based on data from Statistics Canada

  12. Why losses are rising • The climate is changing • Aging infrastructure • More people and property at risk

  13. Global urban population population living in urban areas, billions Source: ICLR, based on data from the United Nations

  14. Overview • Why are disaster losses rising? • What can be done, including the role of insurance? • What are the weather information needs of insurers?

  15. What can be done? • Loss prevention • Risk transfer

  16. Loss prevention • Structural measures • Non-structural measures • Public awareness

  17. Structural measures • Dams, levees, seawalls and other engineered structures can be effective mechanisms for protecting communities. • Building codes that reflect climate knowledge.

  18. Non-structural measures • Land use planning • Plantings can reduce beach erosion • Healthy marshes can help manage flood risk

  19. Public awareness • Informed families and businesses are best able to manage nature’s hazards • Establish a culture of preparedness • Conducting forums similar to this one is essential for sharing knowledge in the industry • Warning systems

  20. Risk transfer • Disaster relief • Purchase insurance

  21. Emergency relief Source: ICLR, based on data from International Red Cross

  22. Use of insurance Source: ICLR, based on data from Swiss Re

  23. Overview • Why are disaster losses rising? • What can be done, including the role of insurance? • What are the weather information needs of insurers?

  24. Insurance requirements • Large population at risk • Small number expected to experience loss • Random occurrence

  25. Role of insurance • Pay disaster losses • Support research in climate extremes • Lobby for better disaster management

  26. Weather information used • Warnings of extreme events • Climate models of extreme event frequency • Verification of weather information

  27. Weather information needed • Improved warning systems • Regional climate models • Link information to building codes

  28. Critical thresholds • Insurers focus on extreme events 2050 1961-1990 p=33.3% Factor 25 p=1.3% 15.3 °C 16.9 17.3

  29. Information sources • Meteorological services • Research community • Disaster managers

  30. ICLR • Created by the insurance community in response to the trend of rising disaster losses • Mitigation focus – reduce community vulnerability • Reduce loss of life and property caused by severe weather and earthquakes

  31. ICLR priorities • Build safer communities • Establish safety partnerships • Enhance industry awareness • Promote consumer awareness

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