Reinsurer supports development of new risk transfer solutions
At the Shanghai EXPO, Munich Re highlighted the risks of climate change and the business opportunities of the new risk environment.
Climate change and its consequences are a strategic issue for the reinsurer, as they directly impact its core business. Munich Re sees opportunities for insurance companies which take the lead in providing new forms of coverage, from renewable energy production to carbon trading.
Firstly, the growing number of severe natural catastrophes is giving rise to greater loss potential. Secondly, combating climate change is opening up new business segments, creating opportunities for the insurance industry.
“With innovative insurance products and new coverage concepts, we can support not only adaptation measures but also the development of climate protection technologies,” said Munich Re CEO Nikolaus von Bomhard. “Investors in and operators of new technologies benefit from the safety net provided by Munich Re’s risk-transfer solutions.”
In China, an estimated 200 million people are impacted by natural catastrophes every year. The rising number of severe weather-related natural catastrophes, also due to climate change, is increasing losses and impacting economic development. Innovative insurance solutions can help those affected to mitigate the impact of climate change and to adapt to the changing environment.
China’s insurance market has experienced rapid growth in recent years. However, insurance density and penetration are still relatively low. Coverage against natural catastrophes is not widespread. At the same time economic values, especially in China’s megacities, are rising rapidly and with them the loss potential.
“Due to its exposure to all weather-related perils, its large population and the fast growth in economic values, China is especially affected by climate change – and will be even more so in the future,” said Prof. Peter Höppe, Head of Geo Risks Research at Munich Re. “Over the last 30 years, Asia has been the continent with the largest increase in frequency of weather-related disasters. Loss-relevant events have tripled in number, which presents new challenges for all exposed economies.”
Given its high exposure to natural catastrophes, Munich Re supports the formation of a natural catastrophe pool to cover public and private property. Munich Re said it is well positioned to support such a pool with significant reinsurance capacity.
Asia is particularly exposed to natural catastrophes. According to Munich Re's NatCatSERVICE database, 34% of the 850 global natural catastrophes in 2009 occurred in Asia, accounting for 31% of overall economic losses. However, only 7% of those catastrophe losses were insured. In 2009, 71% of all fatalities from natural disasters were recorded in Asia. Over the last century, with a rise of more than 1°C, Asia has been the continent with the largest temperature increase.