Public-private partnerships needed to close protection gap: AXA chair

The insurance industry and the public sector need to work together, especially through global partnerships, in order to close the protection gap that leaves emerging Asian countries most vulnerable to natural catastrophes, according to Denis Duverne, chairman of Insurance Development Forum (IDF) and chairman of the board of AXA, who was speaking at the annual Global Insurance Forum held in Singapore.

The protection gap, or the difference between total losses and insured losses, is said to be the highest in developing Asian countries relating to the natural catastrophes. The share of uninsured property catastrophe losses caused by storms, floods and earthquakes is above 90 per cent in these countries.

According to the Asian Development Bank (ADB), between 2000 and 2018 more than four in five people (84 percent) affected by natural hazards were living in developing Asia; the region accounted for 55 percent of the global disaster death toll, and for 26 percent of global damages. In the period from 1970 to 2019 the region lost $1.5 trillion due to natural disasters, while the estimated costs of damage from these catastrophes as a percentage of GDP is said to be increasing.

Duverne said: “The insurance industry and the public sector need to accelerate their collaboration into action. We need to drive concrete significant measures to extend the use of insurance and related risk reduction capabilities to help build greater resilience to climate risk and natural catastrophes in countries where it is needed most.”

“The insurance industry has vast technical expertise on how to increase climate resilience for infrastructure assets, and risk transfer mechanisms are a critical source of funding for repairing or reconstructing infrastructure when it is damaged or destroyed by a natural disaster," he added. "To protect economic gains, enabling greater access to these capabilities should be at the forefront of the policy agenda for the region.”

Achim Steiner, administrator of the United Nations Development Programme (UNDP), said: “The consequence of unmanaged risk is clear. In 2018, there was $160 billion of loss from natural hazard, $80 billion of which was not insured. The impact of this loss on lives and livelihoods is immense, especially in the most vulnerable countries and communities.

“The insurance industry has a critical role to play in helping to close this ‘protection gap’ and UNDP looks forward to working with them on innovative partnerships to achieve this, especially through global partnerships such as the Insurance Development Forum and InsuResilience Global Partnership, to which we remain firmly committed."

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