Swiss Re Forecasts Increasing Demand for Natural Catastrophe Coverage

Swiss Re has concluded that, despite the unusually quiet 2009 hurricane season, “overall natural catastrophe losses have increased significantly over time and are expected to grow further.

“The premium for our book of natural catastrophe covers reached $1.8 billion. Due to the lack of large catastrophe events in 2009 it contributes substantially to Swiss Re’s overall profit.”

Executive Board Member and Head of Property & Specialty, Matt Weber, noted: “Europe has seen above average losses in 2009. The impact of climate change is likely to cause more frequent and more severe storms and floods around the globe in future.”

Swiss Re pointed out that “average insured natural catastrophe losses world-wide went from $5.1 billion per year in 1970-1989 to $27.1 billion per year in 1990-2009. As a result, we are seeing an increase in demand for natural catastrophe cover.”

The reinsurer described its approach as “intelligent cycle and sound risk management,” adding that this it “remains crucial,” not only in “the current environment but also when considering potential catastrophes.”

To tackle the problem, Swiss Re reiterated its call for the establishment of “strong public-private partnerships,” as they will be “essential in tackling the marked increase in risk posed by natural catastrophes, especially in markets with outstanding hazards or developing insurance. Cases like the increasing storm surge risk in The Netherlands or Denmark become the challenges of the future.”

One part of the ongoing solutions, strongly back by Swiss Re, is “innovative risk transfer solutions such as: tailor-made, complex solutions for industrial risks or emerging markets, including parametric covers; catastrophe bonds and weather derivatives,” the bulletin concluded.

Source: Swiss Re – www.swissre.com

Topics Trends Catastrophe Swiss Re