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An Insurance Perspective

An Insurance Perspective. Professor David Crichton Association of British Insurers. World wide insurance losses. Natural Catastrophe Losses - Decadal Totals. Source: Munich Re, January 2000. UK Weather Claims Costs. Source: ABI Statistics Bulletins. UK Storm Claims. October 1987

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An Insurance Perspective

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  1. An Insurance Perspective Professor David Crichton Association of British Insurers

  2. World wide insurance losses Natural Catastrophe Losses - Decadal Totals Source: Munich Re, January 2000

  3. UK Weather Claims Costs Source: ABI Statistics Bulletins

  4. UK Storm Claims • October 1987 • 1 million claims, cost £1,400 million • January/February 1990 • 3 million claims, cost £2,400 million • Reinsurers paid 60% of the claims costs then. Now they would only pay 20% • 1993 “Braer” Storm, 915 millibars (European record low, 912 millibars)

  5. UK Subsidence - nearly £1m a day £ million incurred costs UK Domestic subsidence total cost over last ten years: £3338m Source: ABI Statistics Bulletins

  6. Increased Flooding? 2020s 2050s 2080s Medium-low Medium-high Source: UK CIP Technical Report No 1

  7. Government and insurers... • May 1998, Sarno floods in Italy, the Italian Government paid the equivalent of 150m Euros in compensation to victims. • April 1998, Midlands floods in England, insurers paid the equivalent of 232m Euros in compensation to victims. • - but many low income families in the UK cannot afford insurance.

  8. The Risk Triangle A Framework for Adaptation? RISK Hazard Vulnerability Exposure

  9. Example: Flood Risk • Insurers are becoming more pro active • They are increasingly taking steps to manage vulnerability and exposure • ABI wants to help Government to manage hazard. It has funded major research projects and shared the results with Government.

  10. Dealing with Hazard • New methods for calculating return periods • Remote Sensing for better flood mapping • Importance of SUDS • Analysis of sea defence capability • Guarantee of continued cover but only so long as Government is seen to be taking action.

  11. Dealing with Vulnerability • National Flood Claims Database - 25 insurers contributing • Importance of building standards • Resilient reinstatement?

  12. Dealing with Exposure • Scottish NPPG 7 - Flood Appraisal Groups • Draft PPG 25 for England • Financial Services Authority’s new policy.

  13. Adaptation Priorities • More resilient, mandatory, building standards and quality assurance inspections, for new build, reinstatement and renovation. • Stricter planning control in flood risk areas and on contaminated land. • Take climate change into account in design of drainage, flood defence, and buildings.

  14. To Conclude... • The insurance industry has a role to play. • The ABI welcomes dialogue with the Government and its agencies. Association of British Insurers: www.abi.org.uk david@crichton.sol.co.uk

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