# Presentation: 551103

## Weather Information and Insurance

- Paul Kovacs
- Executive Director
- Institute for Catastrophic Loss Reduction
*Orlando, January 11, 2002*

## Overview

- Why are disaster losses rising?
- What can be done, including the role of insurance?
- What are the weather information needs of insurers?

## Overview

**Why are disaster losses rising?**
- What can be done, including the role of insurance?
- What are the weather information needs of insurers?

## Disasters are a serious threat

- 2,800 events during the 1990s
- 500,000 people killed
- 2 billion people displaced
- US$700 billion damage

- Source: ICLR, based on data from the International Red Cross

## Global natural disaster losses

**billions of 2000 US dollars**

- Source: ICLR, based on data from Munich Re

**Global natural disaster losses**

## Why are losses are rising?

***The climate is changing***
- Aging infrastructure
- More people and property at risk

## Projected extreme precipitation

**size of event (mm), Canada**

**recurrence time (years)**

- Source: Kharin and Zweirs (2000)

## Projected sea level change 

- Source: Canadian Climate Change Model

- sea level rise in northwest Atlantic (cm)

## Why losses are rising

- The climate is changing
***Aging infrastructure***
- More people and property at risk

## Aging infrastructure

- Source: ICLR, based on data from the Federation of Canadian Municipalities

## Infrastructure spending

- Source: ICLR, based on data from Statistics Canada

## Why losses are rising

- The climate is changing
- Aging infrastructure
***More people and property at risk***

## Global urban population

**population living in urban areas, billions**

- Source: ICLR, based on data from the United Nations

## Overview

- Why are disaster losses rising?
**What can be done, including the role of insurance?**
- What are the weather information needs of insurers?

## What can be done?

- Loss prevention
- Risk transfer

## Loss prevention

- Structural measures
- Non-structural measures
- Public awareness

## Structural measures

- Dams, levees, seawalls and other engineered structures can be effective mechanisms for protecting communities.
- Building codes that reflect climate knowledge.

## Non-structural measures

- Land use planning
- Plantings can reduce beach erosion
- Healthy marshes can help manage flood risk

## Public awareness

- Informed families and businesses are best able to manage nature’s hazards
- Establish a culture of preparedness
- Conducting forums similar to this one is essential for sharing knowledge in the industry
- Warning systems

## Risk transfer

- Disaster relief
- Purchase insurance

## Emergency relief

**Emergency relief**

- Source: ICLR, based on data from International Red Cross

## Use of insurance

**Use of insurance**

## Overview

- Why are disaster losses rising?
- What can be done, including the role of insurance?
**What are the weather information needs of insurers?**

## Insurance requirements

- Large population at risk
- Small number expected to experience loss
- Random occurrence

## Role of insurance

- Pay disaster losses
- Support research in climate extremes
- Lobby for better disaster management

## Weather information used

- Warnings of extreme events
- Climate models of extreme event frequency
- Verification of weather information

## Weather information needed

- Improved warning systems
- Regional climate models
- Link information to building codes

## Critical thresholds

- Insurers focus on extreme events

- 1961-1990

- 15.3 °C

- 17.3

- 16.9

- 2050

- p=33.3%

- p=1.3%

- Factor 25

## Information sources

- Meteorological services
- Research community
- Disaster managers

## ICLR

- Created by the insurance community in response to the trend of rising disaster losses
- Mitigation focus – reduce community vulnerability
- Reduce loss of life and property caused by severe weather and earthquakes

## ICLR priorities

- Build safer communities
- Establish safety partnerships
- Enhance industry awareness
- Promote consumer awareness