Research undertaken for Lloyd’s has revealed a $168 billion annual shortfall between levels of insurance and actual economic losses caused by natural disasters across the world.
Seventeen of the 42 countries analysed are significantly at risk and Lloyd’s is urging governments, insurers and businesses to do more to close the gap.
The study, undertaken by the Centre for Economic and Business Research, shows that last year alone, earthquakes, floods, storms, tsunamis and other natural disasters led to insurance payouts of over $116 billion, but with insurance covering less than a third of the $370 billion economic loss.
And not all of the more exposed countries are in emerging markets – in Japan, for example, only $35 billion of the estimated $210 billion of total damage wrought by the 2011 earthquake and tsunami was insured.
Commenting on the findings, Lloyd’s chief executive, Richard Ward, says: “After the devastating earthquakes in Japan and New Zealand, and severe flooding in Thailand and Australia, the impact of natural catastrophes is clear.”
Swiss Re chief economist, Kurt Karl, adds: “The gap between economic and insured losses can be severe in low- to middle-income countries, where the magnitude of the losses arising from a catastrophe may outstrip the government’s ability to act as insurer of last resort.”
Category: Insurance News