Predicting Disaster, Managing Losses · Austria Rain, Floods August 2002 RP > 150 years Czech Rep....
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Predicting Disaster, Managing Losses Thomas R. Loster GeoRisks Research, Munich Re Head of Weather/Climate Risks Research Münchener Rück Munich Re Group Finance, Environment and Sustainable Development Corporate Responsibility and Capital Markets Managing Qualitative Risk Issues Paris 10.1.2003
Transcript of Predicting Disaster, Managing Losses · Austria Rain, Floods August 2002 RP > 150 years Czech Rep....
Predicting Disaster, Managing Losses
Thomas R. LosterGeoRisks Research, Munich ReHead of Weather/Climate Risks Research
Münchener RückMunich Re Group
Finance, Environment and Sustainable DevelopmentCorporate Responsibility and Capital Markets Managing Qualitative Risk IssuesParis 10.1.2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
Contents
– Loss trends
– Changing risks
– Tasks (homework)
– Environment and sustainability
Finance, Environment and Sustainable Development Paris, 10th January 2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
0
10
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30
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1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000
Economic losses(2001 values )
of which insured losses(2001 values )
Trend of economic losses
Trend of insured losses
US
$ b
n
>167 bn US$
Great natural catastrophes 1950–2001
© 2002 GeoRisks Research Dept., Munich Re
Finance, Environment and Sustainable Development Paris, 10th January 2003
Great Weather Disasters 1950 - 2001
Decade Decade Decade Decade Decade1950 - 1959 1960 - 1969 1970 - 1979 1980 - 1989 1990 - 1999 1992 - 2001 last 10:60s
Number
Economiclosses
Insuredlosses
Losses in US$ billion - 2001 values
Decade comparison
13 16 29 44 72 64 4.0
41.2 54.1 79.4 126.1 425.4 362.0 6.7
- 7.2 11.5 23.0 98.9 11.079.3
last 10 Factor
MRNatCatSERVICE© 2002 GeoRisks Research Dept., Munich Re
Finance, Environment and Sustainable Development Paris, 10th January 2003
The heat is on
Finance, Environment and Sustainable Development Paris, 10th January 2003
The present problemsproblems will be strongly aggravatedaggravatedif the climatic change predictions come true
? greenhouse gases
? temperature air/sea
? humidity
? sea level
? windstorms/storm surges
? thunderstorms/hailstorms
? rainstorms/floods
? crop hazards
Increase in
? ozone "hole" ? skin cancer
Another problem
? biosphere damage
Finance, Environment and Sustainable Development Paris, 10th January 2003
very cold cold normal warm hot
normal warmer climate
More extreme events in a warmer climateExample: heat waves
extremeextreme
cold normal warm very extremehot extreme
Finance, Environment and Sustainable Development Paris, 10th January 2003
A few recent weather related disasters
Selected events (focus France, Germany)
Region Event Date Remark
France (N) Rain, Floods April/May 2001 worst since 1926Germany Severe storms May South: 140 mm/24 hrsGermany Severe storms July 2002 record winds, rainGermany Rain, Floods August 2002 RP > 150 yearsAustria Rain, Floods August 2002 RP > 150 yearsCzech Rep. Rain, Floods August 2002 RP > 100 yearsSpain Rain, floods March/Ap. 2002 225mm/3 hoursFrance (S) Rain, Floods September 2002 annual prec. in 36 hrs.France, Germany Windstorm Jeanett October 2002 large areaFrance, Europe Storm, Rain, Floods January 2003 widespread over
Europe
Events started to become more extreme !
Finance, Environment and Sustainable Development Paris, 10th January 2003
To Do
Finance, Environment and Sustainable Development Paris, 10th January 2003Münchener RückMunich Re Group
Windfield Storm „Lothar“ 26.12.1999
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no data1 - 7070 - 8080 - 9090 - 100100 - 110110 - 120120 - 130130 - 140140 - 150150 - 160160 - 170170 - 220
Finance, Environment and Sustainable Development Paris, 10th January 2003Hail Munich
Finance, Environment and Sustainable Development Paris, 10th January 2003
Computer techniques
Overlayingandcalculating
• buildings• values • land use• storm tracks• flood levels• sums insured• etc.
Finance, Environment and Sustainable Development Paris, 10th January 2003
Loss Potentials of Selected Natural Disaster Scenarios
Scenario Return period Economic loss Insured loss(1x in .... years) (US$ bn) (US$ bn)
Windstorm USA 100 80 40
Earthquake USA 100 50 20
1000 200 80
Windstorm Europe 100 30 20
Windstorm Japan 100 25 20
Earthquake Japan 100 100 10
1000 2000 50© Munich Re 2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
Insurance Tools
?Adequate pricing?Substantial deductibles,
based on the respective exposure ?Loss prevention?Accumulation control
?Improved claims settlement?Reinsurance, retrocession ?Liability limits?Exclusion of certain hazards?Exclusion of particularly exposed areas
Finance, Environment and Sustainable Development Paris, 10th January 2003
LotharPrestige
Finance, Environment and Sustainable Development Paris, 10th January 2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
Finance, Environment and Sustainable Development Paris, 10th January 2003
Meet the Expectations of the Stakeholders
– Shareholders
– Clients
– Rating Agencies
– Public Interest, Reputation
– Employees
Environmental Issues and SustainabilityEnvironmental conditions
Finance, Environment and Sustainable Development Paris, 10th January 2003
– Loss potentials analyses (incl. trends)
– Insurance tools (e.g. adequate premiums)
– Asset Management (DJSI, FTSE4Good etc.)
– Housekeeping (Certification etc.)
– Real Estate Management
– Education
Environmental Issues and SustainabilityImportant tasks (homework)
Finance, Environment and Sustainable Development Paris, 10th January 2003
Kyoto Protocol Support Insuring the MechanismsProducts can include:
- Business Interuptions- Forest-/Agriculture projects (CO2 sinks, yield)- Buffer Insolvencies etc. (credit insurance, surety bonds etc.)- Projects Financing (more an issue for banks)- Others (Consulting, Trading, CO2 Banking etc.)
What we need:
=> long-term political certainty on regulations (political risks)=> clear values for GHG emission reductions (business plans) => active CDM-, JI-, ET World (spread portfolios)=> strong rules and regulations (=> compliance regime)=> good global consensus is an important prerequisite!
Finance, Environment and Sustainable Development Paris, 10th January 2003
Thank you – questions ??
