View this article online: https://www.insurancejournal.com/news/international/2014/12/01/348526.htm
Willis Group announced that the “1-in-100” disaster resilience initiative, of which it has been a key architect, has received support from the United Nations.
The “1-in-100” is a drive by public and private sector organizations worldwide to integrate natural disaster risk into the financial system, promoting disaster resilience and protecting against climate risk.
The broker outlined its support for the measure at the International Insurance Society’s annual conference in London last June.
Willis said the initiative’s core is the 1-in-100 year financial stress test, similar to that developed in recent decades by the insurance sector to assess its own ability to underwrite risks. The test evaluates the maximum probable annual financial loss that a company, city, or region could expect once in a hundred years and enables them to manage their risk in a more informed and effective way.”
Willis’ CEO Dominic Casserley, speaking at the invitation of UN Secretary General Ban Ki-moon and the Prime Minister of Japan, H.E. Shinzo Abe, outlined the initiative to world leaders during the recent UN Climate Summit at the UN Headquarters in New York.
“Over a quarter of a century, the insurance industry has developed metrics and regulatory frameworks that have transformed our resilience to natural disaster risk, enabling us to meet our commitments to the global economy and society during years of unprecedented natural catastrophe losses. We are sharing the lessons we have learned during this process with the financial sector and the wider economy,” he said.
“Applying a 100 in 100 year solvency ‘stress test’ to current assets and current climate conditions can help organizations to truly understand their risk and manage it in an economically rational way. Working closely with the UN Secretary General’s Office and regulatory authorities, we aim to apply these tried and tested principles within the global financial system by 2020.”
The UN Climate Summit included a policy dialogue session to discuss these opportunities, co-chaired by Margareta Wahlstrom, Assistant UN Secretary General and Head UN Office for Disaster Reduction, and Mike Morrissey, with contributors including US Chief Science Adviser John Holdren; Sebastian von Dahlen, Chief Economist of the International Association of Insurance Supervisors; the Mayor of Bogota; and Dutch Environment Minister Wilma Mansveld.
In a joint action statement released following the climate summit in New York, the United Nations outlined the commitments made by insurance-related organizations involved in the 1 in 100 initiative including:
– Liaising with regulatory authorities and stakeholders to determine how the 1 in 100 stress test approach initiative could be implemented beyond insurance into wider financial regulation and accounting standards by 2020.
– Establishing a Resilience Modelling and Mapping Forum to coordinate research programs and provide open modelling and mapping platforms that are key to providing organizations with the data needed to evaluate their exposure to disaster risk, with the aim of coordinating at least $100 million of annual investment into public science research by the global insurance industry and related sectors from 2016 onwards.
Updates on the progress of the initiative will be provided at a series of UN and insurance sector events in 2015 including the IIS Annual Seminar in New York in June, and the initiative will also help shape future legislative and regulatory frameworks of disaster risk reduction including the UN Hyogo Framework for Disaster Risk Reduction (March 2015); the UN Sustainable Development Goals (June 2015) and the December 2015 Climate Conference in Paris, the UN said.
“We believe that many lives can be saved and billions of dollars in potential losses from extreme events can be avoided if we succeed in integrating climate and disaster risk into the very heart of our economic decision making. Working alongside the UN and our initiative partners, we will engage with regulators, accounting bodies, ratings agencies and the wider business community to develop adoption of these standards,” said Rowan Douglas, CEO of Willis’s Capital, Science and Policy Practice, and private sector leader of the 1-in-100 initiative.
Source: Willis Group Holdings