Less than half of Apac’s H1 losses from natural disasters were insured: Munich Re
Michelle Zhu
OUT of US$7 billion in overall losses incurred by natural disasters in the Asia-Pacific (Apac) region in the first half of 2023, only US$3 billion was insured.
This was based on provisional estimates released by reinsurance and insurance solutions provider Munich Re on Thursday (Jul 27).
Flooding and landfall in New Zealand contributed to much of the region’s losses for the half-year period, with just US$2.9 billion insured out of the estimated US$4.3 billion in assets destroyed.
The losses wrought by Cyclone Mocha in Myanmar, Bangladesh and India in May came in at US$1.1 billion, but only a neglible portion of that was insured.
Globally, Munich Re estimated H1 losses from natural disasters to tally at US$110 billion – well above the 10-year, inflation-adjusted average of US$98 billion. But it noted that insured losses were much higher at US$43 billion, compared to the 10-year average of US$34 billion.
Most of the overall global losses were attributed to the earthquake that rocked Turkey and Syria in February, resulting in US$40 billion in losses in total for both countries.
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Munich Re highlighted that Turkey, which accounted for the lion’s share of those losses, had a “small” insured portion of overall losses despite an insurance penetration of over 50 per cent.
Even with the establishment of the Turkish Catastrophe Insurance Pool (TCIP), the company noted that the sum insured was limited to 640,000 Turkish lira (US$34,000) per residential unit at the time of the earthquake.
The TCIP provides compulsory insurance for residential buildings in the country, but not for commercial enterprises and infrastructure in general.
“Particularly in a country as exposed to earthquakes as Turkey, it would be both desirable and practicable to have a wider spread of insurance cover, to ensure that those affected – governments included – can recover more rapidly from the financial losses,” said Munich Re.
Thomas Blunck, member of Munich Re’s board of management, said: “The earthquake disaster in Turkey and Syria illustrates the importance of robust and safe buildings. The primary aim must be to save lives. The next step is to reduce losses in such catastrophes.”
In his view, the global loss figures for H1 “starkly illustrate” a need to handle the consequences of global warming, which are evident in the form of more frequent or more severe weather disasters.
This could be done by employing appropriate construction methods, selecting sites that can withstand future impacts, and by having insurance to cover the immediate financial consequences, he added.
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