The insurance industry must work together with its clients if it is to mitigate change and remain profitable, says John Nelson, chairman of Lloyd’s of London.
Speaking at the UN Financial & Private Sector Disaster Resilience Global Summit, Nelson said: “It is a shared belief that the sector must work together to mitigate change. Failure to do so will damage profits.”
Addressing the need for higher insurance uptake in higher growth economies, Nelson referenced China and said that industry must work together to increase penetration here.
He also said that some 13 out of 14 of the warmest years on record occurred in the 21st century and that average annual losses now account for around $2 billion.
“We need to see a better use of models, better mapping of disasters and the encouragement of better data sharing,” he said.
“We must also ensure that risk based pricing remains the same and that we learn from previous mistakes. Building a property on the same spot where it has been previously demolished by a natural disaster is unacceptable.”
Nelson referred to Chile as an example of a country that has sufficiently developed its disaster planning.
“Buildings in Chile have sufficient earthquake protection in place, which has helped them to minimise damages when events occur, however a country like Haiti has no such protection,” he said.
“We need to call for clear standardisation of buildings in areas that are disaster prone and look to extend this knowledge to areas such as flooding.”
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John Nelson, Lloyd's, Europe