Disaster Insurance Reimagined - Protection in a Time of Increasing Risk

Published: 1 August 2023

This book is about the critical yet little-known work of “Protection Gap Entities” (PGEs), in disaster protection. Disasters, such as floods, earthquakes, and terrorist attacks, are becoming more frequent and more intense. These disasters threaten not only life, but also livelihood, causing the loss of homes and jobs that can scar the lives of those affected. Disaster insurance, by providing funds for reconstruction, plays an essential role in limiting these consequences of disaster. Yet disaster insurance is under threat in many contexts, becoming unaffordable or being withdrawn entirely.

Gallagher Re Natural Catastrophe Report: First Half 2023

17 July 2023

The first six months of 2023 featured above average natural catastrophe losses as both the National Oceanic and Atmospheric Administration (NOAA) and the World Meteorological Organization (WMO) declared the official arrival of El Niño. The severe convective storm (SCS) peril was highly dominant for the insurance industry, with the bulk of these losses occurring in the US. For all perils, the US accounted for 76% of global insured losses. Other parts of the world experienced significant natural hazard activity, detailed in the full report.

State of the Global Climate in 2022

21 April 2023

The State of the Global Climate 2022 shows the planetary scale changes on land, in the ocean and in the atmosphere caused by record levels of heat-trapping greenhouse gases. For global temperature, the years 2015-2022 were the eight warmest on record despite the cooling impact of a La Niña event for the past three years. Melting of glaciers and sea level rise - which again reached record levels in 2022 - will continue to up to thousands of years.

sigma 1/2023 - Natural catastrophes and inflation in 2022: a perfect storm

Swiss Re

22 March 2023

The loss generating power of nature, alongside the socio-economic and geopolitical crises of recent years helped pushed property reinsurance rates to 20-year highs in the January 2023 renewals season.

Global economic losses from natural disasters mounted to USD 275 billion in 2022. At USD 125 billion, insured losses covered 45% of the damage, the fourth highest total for a single year on sigma records. Today, annual global insured losses of more than USD 100 billion from natural catastrophes are standard.

Global Insurance Report 2023: Closing the personal P&C protection gap

McKinsey & Company

15 March 2023

Despite a slowdown during the height of the pandemic, personal property and casualty (P&C) insurance has seen annual growth of 3 percent since 2019. Personal lines still represent more than half of global P&C gross written premiums (GWP), but a growing protection gap in both developed and developing countries indicates that insurers struggle to design products fit for the evolving and emerging risks that modern personal-lines consumers demand.

2022 Catastrophe Review Executive Summary report

Moody’s RMS

28 February 2023

The Moody’s RMS 2022 Catastrophe Review Executive Summary report discusses how large insured losses highlight the need for better risk management, the increasingly amplified interconnectedness of risk, and examines the major catastrophes of 2022 including:

- Hurricane Ian: Florida’s Game-Changer.
- Hurricane Ian’s Challenging Forecast.
- February Europe Windstorm Trio: Reminder of Windstorm Risk Reality in Europe.
- COVID-19 Pandemic.

GFDRR Annual Report 2022 - Bringing Resilience to Scale

28 February 2023

This Annual Report highlights the progress and results achieved during FY22. It provides an overview of grant making activities across GFDRR’s priorities and cross-cutting areas. It also explores some areas of the work in greater depth and includes financial statements for the fiscal year.

Gallagher Re Natural Catastrophe Report 2022

30 January 2023

Throughout 2022, the world saw another year of impactful natural catastrophe events that once again brought into focus the need to better account for the growing risks these hazards bring. The challenges brought by climate change, inflation, social inflation, claims litigation, and further exposure growth into vulnerable areas for disaster risk only further enhanced the resultant impacts seen.

Total insured losses were estimated at USD 140bn, of which USD 125bn was covered by private insurers and USD 15bn by public insurance entities (example: US National Flood Insurance Program). Gallagher Re notes that 2022 became the fifth year since 2017 to cross the USD 100bn threshold.

The Global Risks Report 2023 - 18th Edition

World Economic Forum

11 January 2023

From COVID-19 to war in Europe - as the World Economic Forum's Global Risks Report 2023 explains, these have ushered in a "fresh series of crises in food and energy - problems that decades of progress had sought to solve".

As a result, this year's report presents a set of risks that are both familiar but also feel new. In particular, the return of risks like inflation, cost-of-living and geopolitical confrontations are historically nothing new, but for the current generation of policy-makers and business leaders they're unfamiliar.

2023 Weather, Climate and Catastrophe Insight


January 2023

Global natural disaster losses in 2022 are better covered by insurers who face their fifth costliest year in history; climate change drives new extreme weather records.

Allianz Risk Barometer 2023

January 2023

Elevated levels of disruption look set to continue in 2023 as dangers from digitalization, the war in Ukraine, high energy prices and inflation, geopolitical and economic uncertainty, and climate change test already strained business models and supply chains, according to the Allianz Risk Barometer.

Climate change and La Niña driving losses: the natural disaster figures for 2022

Munich Re

10 January 2023

With overall losses of around US$ 270bn (previous year US$ 320bn) and insured losses of roughly US$ 120bn (previous year US$ 120bn), 2022 joins the recent run of years with high losses. Overall losses were close to the average for the last five years, while insured losses were significantly above average (2017–2021: US$ 97bn). The continued high level of insured losses is impacting insurers at a time when they are having to deal with both high inflation rates and a shrinking capital base due to rising interest rates. In contrast, the positive effect on investments from higher interest rates will only come in time.

AXA Future Risks Report 2022

24 October 2022

Climate change has become the number one concern around the world.

Over the last year, economic and geopolitical challenges have added a new layer of uncertainty to the disruptions caused by the Covid pandemic and the climate crisis. Meanwhile, almost 70% of the general public believe that insurers will have an important role to play in mitigating future risks.

Build Back Better

Flood Re

6 April 2022

Flood Re launched “Build Back Better” which enables insurers, working in conjunction with Flood Re, to repair flooded homes in a more resilient manner against future flooding – not just re-building the home as it was previously.

Build Back Better offers homeowners the chance to install Property Flood Resilience measures up to the value of £10,000 when repairing their properties after a flood. This way the next time the area floods their home will be better prepared to keep as much of the water out as possible. Measures can also be installed so that when water does enter it is easier, quicker and safer for families to clean up and move back in – often in a number of days rather than many months.

Preparing for a wetter world: Strategies for corporate flood resilience


December 2021

'Preparing for a wetter world: Strategies for corporate flood resilience' is the second publication in Rethinking Flood, a four-part series examining the implications of flood risk for corporates, governments, and society.

Business exposure to flood risk is growing, and it is critical for firms to uncover hidden vulnerabilities propagating through their value chain. This report explores the implications of flooding for firms and presents five principles that can be integrated in Enterprise Risk Management (ERM) practices to build resilience.

Enhancing Financial Protection Against Catastrophe Risks: The Role of Catastrophe Risk Insurance Programmes


11 October 2021

The financial management of catastrophe risks presents an important public policy challenge for governments across the world. Climate change, the increasing reliance on digital technologies and socioeconomic trends such as globalisation and urbanisation are affecting the frequency and severity of the floods, cyclones, cyber-attacks and infectious disease outbreaks that produce significant financial, economic and social costs each year.

This report examines the role of catastrophe risk insurance programmes (i.e. loss-sharing arrangements within the insurance sector and often in partnership with governments) in broadening the availability of affordable insurance coverage for catastrophe risks and limiting risks to public finances.

Sunk Costs: The Socioeconomic Impacts of Flooding


June 2021

'Sunk Costs: The Socioeconomic Impacts of Flooding' is the first publication in Rethinking Flood, a four-part series examining the implications of flood risk for corporates, governments, and society. The report offers an overview of the current state and trends of flood risk globally. It discusses the economic costs of flooding, its multi-sectoral impacts, as well as its societal and environmental consequences. The report highlights the potential for flood risk to exacerbate pre-existing socioeconomic inequalities and discusses the role insurance can play to protect vulnerable communities. It additionally analyzes government strategies to narrow the protection gap and enhance national flood resilience, presenting their fiscal costs and potential drawbacks.

Issue Brief: Insurance For Climate Resilience

Climate Finance Advisors

Insurance is a financial instrument that allows vulnerable households, businesses, and communities to gain financial protection from unforeseen adverse events, including climate-related natural disasters and shocks such as storms, floods, fires, and droughts.

Global Climate Risk Index 2021 - Who suffers Most from Extreme Weather Events? Weather-related Loss Events in 2019 and 2000-2019


The Global Climate Risk Index 2021 analyses to what extent countries and regions have been affected by impacts of weather-related loss events (storms, floods, heat waves etc.). Human impacts (fatalities) and direct economic losses were analysed. The most recent data available — for 2019 and from 2000 to 2019 — were taken into account.

Insuring the climate transition: Enhancing the insurance industry's assessment of climate change futures


22 leading insurers and reinsurers from across the globe worked with UNEP FI to develop the first comprehensive guidance for the insurance industry to identify and disclose the impact of climate change on their businesses. This report represents the largest collaborative effort by market participants to pilot some of the most challenging recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Cities at risk – Building a resilient future for the world’s urban centres

This new Lloyd’s report, commissioned before COVID-19 and published in collaboration with Urban Foresight and Newcastle University, provides a comprehensive analysis of the risks’ cities are facing and will face in the future. It looks at their impacts and how urban areas can protect themselves from these threats.

It also suggests ways in which insurers and the relevant authorities could work together to build resilience, reduce risks and develop new insurance products and services that meet cities’ risk needs. This study helps city administrators and risk managers, as well as Lloyd’s market insurers and brokers, understand the risks that will influence the design and function of cities in the coming decade, and how insurance product development could respond to these changes.

Reimagining Resilience in a Post Pandemic World

9 September 2020

Munich Re US White Paper Wants to Know: Can We Use Lessons Learned from COVID-19 Pandemic to Mitigate the Risks of Climate Change?

COVID-19 Risks Outlook - A Preliminary Mapping and Its Implications

This report, written by the World Economic Forum in partnership with Marsh & McLennan and Zurich Insurance Group, taps into the views of nearly 350 senior risk professionals who participated in the COVID-19 Risks Perception Survey. They were asked to take a view on 31 risks across three dimensions: most likely for the world, most concerning for the world and most worrisome for companies.

OECD Policy Responses to Coronavirus (COVID-19) - Responding to the COVID-19 and pandemic protection gap in insurance

The COVID-19 pandemic and the measures taken to limit the spread of the disease have significantly disrupted economic activity in countries around the world, resulting in significant business interruption losses. The vast majority of these losses are likely to be absorbed by policyholders as, unless governments (or courts) intervene, few companies have business interruption coverage that is likely to respond to these types of losses – exposing the existence of an important protection gap for some pandemic-related business interruption losses. This note provides an overview of how business interruption insurance against pandemic risk could be provided with support from governments, and some of the challenges and considerations necessary for establishing such a programme.

Insurance for Climate Adaptation - Opportunities and Limitations

In this background paper submitted to the Global Commission on Adaptation, Cass Business School’s Professor Paula Jarzabkowski, Birkbeck, University of London’s Dr Konstantinos Chalkias and their co-authors make seven recommendations to maximise the benefits of insurance for climate adaptation.

Special report no 25/2018: Floods Directive: progress in assessing risks, while planning and implementation need to improve

Floods can cause injury and loss of life, considerable economic costs, and damage to the environment and cultural heritage. Serious floods have become more frequent in Europe. In recent years, more than twice as many flash floods of medium to large magnitude have been registered as in the late eighties. Climate change is an aggravating factor, triggering changes in precipitation and weather patterns, sea level rises and, consequently, more frequent and severe floods.

12th meeting of the World Forum of Catastrophe Programmes in Madrid

From 25 to 28 September 2018, the Consorcio de Compensación de Seguros (CCS) staged the 12th meeting of the World Forum of Catastrophe Programmes (WFCP) in Madrid.

Between State and Market: Protection Gap Entities and Catastrophic Risk

The challenges posed by the growing catastrophe insurance protection gap, particularly those of rebuilding in the aftermath of disaster, have prompted the generation of entities, which we label Protection Gap Entities (PGEs). These PGEs bring together market and non-market stakeholders in an effort to address the protection gap. They differ considerably in governance, political economies, points of origin, perils, and means of funding loss. Yet PGEs have the same broad goal:

To transform uninsured risk into insurance-based products that can be transferred into global financial markets to provide capital for recovery following a disaster.

Guide To Government Pools

Reinsurance pools seek to provide insurance where there is none or where it is not readily available, but the demand for them is not as great as it should be. To introduce this special report, Jonathan Gale, chief executive, Bermuda Reinsurance and managing director at AXA XL, writes that the industry needs to develop a broader approach to how the risk is assumed and accounted.

Climate insurance and water-related disaster risk management - Unlikely partners in promoting development?

There is a growing consensus that insurance, risk transfer, and sharing mechanisms have an important and growing role to play, particularly in offsetting the economic impacts associated with extreme events. What is less clear is the extent to which such instruments encourage adaptation programmes and policies that would serve to minimise future loss and damage and, hence, contribute to sustainable development. This paper does not pretend to offer answers, but rather contributes to the emerging discussion and brings to that discussion a water lens.

Insurance of weather and climate-related disaster risk: Inventory and analysis of mechanisms to support damage prevention in EU

Ramboll and the Institute for Environmental Studies (IVM) were contracted by the European Commission (EC) to conduct a study on the insurance of weather and climate-related disaster risk, and to create an inventory and analysis of mechanisms to support damage prevention in the European Union (EU). The study provides an overview of the use of insurance against natural disasters. It suggests general recommendations as well as specific recommendations on the role of the European Commission in addressing the issues uncovered, and encourages stakeholder’s efforts and best practices observed across the EU.