Dfloods

Times of Oman - - FEATURE -

isas­ter-prone de­vel­op­ing na­tions, in­clud­ing Bangladesh and In­done­sia, are ex­posed to crip­pling losses when storms,

or earthquakes strike be­cause they suf­fer from a dan­ger­ous lack of in­sur­ance, in­dus­try ex­perts said on Mon­day.

Glob­ally, as­sets worth about $163 bil­lion are not in­sured against catas­tro­phes, pos­ing a “sig­nif­i­cant threat” to liveli­hoods and pros­per­ity, Lon­don-based in­sur­ance mar­ket Lloyd’s said in a re­port.

The value of “un­der­in­sured” as­sets has shrunk by only 3 per cent since 2012, it noted.

Many coun­tries with the low­est lev­els of in­sur­ance are also among those most ex­posed to risks, in­clud­ing from cli­mate change im­pacts, and are least able to fund dis­as­ter re­cov­ery ef­forts, it added.

“If in­sur­ance is not avail­able, catas­tro­phes can have a much greater im­pact on economies and lives,” Lloyd’s Chair­man Bruce CarnegieBrown said in a state­ment.

Emerg­ing and low-in­come economies ac­count for al­most all of the global “in­sur­ance gap”, the re­port said.

In­sur­ance pen­e­tra­tion rates — to­tal in­sur­ance pre­mi­ums as a per­cent­age of gross do­mes­tic prod­uct — are on av­er­age twice as high in rich na­tions as those in de­vel­op­ing coun­tries, it noted.

Bangladesh, In­dia, Viet­nam, the Philip­pines, In­done­sia, Egypt and Nige­ria all have an in­sur­ance pen­e­tra­tion rate of less than one per cent, it said.

Af­ter a dis­as­ter, unin­sured losses usu­ally have to be paid from gov­ern­ment funds — a prob­lem for poorer coun­tries that can­not af­ford to re­build.

“Catas­tro­phes cou­pled with un­der­in­sur­ance can be seen as one of the sig­nif­i­cant fac­tors that holds back eco­nomic de­vel­op­ment and per­pet­u­ates global in­equal­ity,” the re­port said.

Some risks in richer na­tions also are not well-cov­ered by in­sur­ance, it noted, in­clud­ing earthquakes in Italy and floods in the United States.

Slow progress on ex­pand­ing the use of in­sur­ance to pro­tect against risks is “con­cern­ing”, the re­port said — and re­mains the case de­spite many economies bounc­ing back from re­ces­sion in the six years since the “in­sur­ance gap” was last mea­sured.

It is par­tic­u­larly wor­ry­ing given the up­surge in “more se­vere, fre­quent and costly nat­u­ral dis­as­ters, driven in large part by cli­mate change”, the re­port added.

Last year was one of the costli­est for nat­u­ral catas­tro­phes in the past decade — and ex­pected eco­nomic losses from such dis­as­ters

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