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Closing the protection gap
Every year, natural disasters wreak havoc across the world, causing immense harm and destruction wherever they strike. In their wake they leave long-term damage to millions of livelihoods and undermine efforts to build sustainable economic growth. The Bank of International Settlements calculates that in some cases, especially in developing markets, the worst natural catastrophes can permanently reduce a country’s GDP by almost 2%. In 2017, the hurricanes that devastated parts of the US and the Caribbean, the earthquake in Mexico and flooding in Asia emphasised the ever-increasing risk posed by natural catastrophes. Weather- related catastrophes are thought to be increasing in frequency and severity due to climate change. This trend, combined
with population growth and increasing urbanisation, means more people are being impacted more often. In fact, the number of weather-related loss-events has tripled since the 1980s and inflation-adjusted insurance losses in the same period have increased from an annual average of USD 10 billion to USD 50 billion, according to data from Munich Re. The economic losses caused by natural catastrophes in 2017 look set to be among the worst in recent memory, with Swiss Re data estimating such losses at USD 300 billion in 2017, compared to an average of USD 178 billion for the previous 10 years.With an estimated USD 131 billion of these losses insured, the protection gap is clear. 1
1 Data from Swiss Re Sigma, 20 December 2017. http://www.swissre.com/media/news_releases/nr20171220_ sigma_estimates.html
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