Natural disasters worldwide:

The largest share of the increase in losses is due to the rising values exposed to natural catastrophes. However, studies are providing ever clearer evidence that man-made climate change is playing an increasingly important role in the rising losses, especially for non-peak perils.

In addition, short- and medium-term natural climate fluctuations have a significant impact on the specific risk situation. One example is the ENSO (El Niño/Southern Oscillation) climate oscillation, whose alternating El Niño and La Niña phases influence weather extremes in many parts of the world.

All in all, two things are therefore necessary to limit the damage: loss-reducing adaptations to the risk, such as more stable buildings and avoiding construction in high-risk areas, and halting climate change as far as possible.

Often only a small portion of natural disaster damage is covered by insurance. At the beginning of the 1980s, only some 14% of the damage was covered by insurance. In recent years it was still no more than roughly a half.

In developing and emerging countries, however, the situation has remained unchanged for decades: the insured portion is still well under 10%, often significantly lower. Yet a broader use of insurance could help people, especially in emerging markets, to cope with financial losses after natural disasters and make it easier for them to return to a normal life.

For insurers, in-depth knowledge of risks and how they change is essential to assess loss trends and provide reliable risk coverage. When the trend of increasing losses due to natural catastrophes became apparent in the 1970s, Munich Re systematically expanded its expertise. Since then, experienced scientists and insurance experts have been analysing and evaluating the entire spectrum of natural hazards, from tropical cyclones, severe thunderstorms and floods to earthquakes and volcanic eruptions.

Research into the scientific relationships, the analysis of large amounts of data (data analytics) and high-resolution risk models that take into account all trends are indispensable. They form the basis for offering our clients natural catastrophe covers on a large scale and for further expanding our capacity, including with innovative insurance solutions. The objective is to correctly assess the loss potential of natural hazards and to make findings on changes available at an early stage for our own risk management and for our customers.