A report from Munich Re estimates that losses due to natural catastrophes totaled €17 billion [$23.24 billion] in Europe in the first nine months of 2013, “dominated by flood losses, which accounted for a share of 75 percent.”
The world’s largest reinsurer stressed that “governments and insurance companies need to concern themselves more closely with risk mitigation strategies in order to limit such losses. In addition, strong fluctuations in business results can thus be avoided.” Munich Re added, rather redundantly, that it “provides the services and solutions required in this regard.”
The situation, however, does point to a greater need for mitigation strategies, as the “long-term trend in the number of natural catastrophe events and the resulting losses is clearly pointing upwards.”
Munich Re said its natural hazards statistics confirm that “severe weather events have almost tripled worldwide since 1980. Flood events in Germany and central Europe have doubled since 1980.”
Ludger Arnoldussen, member of Munich Re’s Board of Management, said: “It is urgently necessary to adapt to such events now. Studies clearly show that it makes far more economic sense for economies to invest in prevention early on and thus avoid losses.
“From a humanitarian perspective, at any rate, preventive measures are a must. They reduce susceptibility to loss, particularly in the case of flood risks. Examples of preventive measures include the designation of flood plains near rivers, cross-border river management and, of course, private protection measures.”
The flooding in southern and eastern Germany and neighboring states in May and June 2013 “gave rise to an economic loss of more than €12 billion [$16.4 billion], and was the “biggest loss event thus far.
“Given their dimension, natural catastrophes have a substantial influence on insurers’ results and capitalization,” the report continued, adding that Munich Re offers tailored reinsurance solutions to moderate these fluctuations.
“Special risk transfer solutions are available for the coverage of entrepreneurial risks arising from uncertain and unforeseeable weather systems – for instance, for energy companies whose turnover is dependent on the weather. In addition, Munich Re assists its clients in identifying and managing risk on the basis of comprehensive data analyses.
“The risks are recorded according to their geographic location to ensure that even regionally extensive portfolios can be assessed in a risk-commensurate manner.” Arnoldusen added: “Our services and risk expertise are what distinguishes us from other market players. We have a very broad spectrum of solutions to offer our clients.”
Munich Re also indicated that it sees itself as “well positioned for the forthcoming treaty renewal negotiations in reinsurance business and expects prices for business in its own portfolio to remain largely stable. Special circumstances apply to the German market, where the high claims burden from natural hazard events in the current year will play a major role in the renewal discussions.”
Source: Munich Re
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