AXA XL unveils new tool to tackle disaster recovery
Re/insurer AXA XL has partnered with Cambridge Centre for Risk Studies to launch an online tool to help companies tackle disaster recovery as the frequency and severity of natural catastrophes, such as floods, droughts and hurricanes, continues to rise due to the impacts of climate change.
The new online disaster recovery hub will include over 100 case studies of major disasters resulting from different global events. They range from the 2004 Bangladesh floods and the Kashmir earthquake in Pakistan in 2005 to 2012’s Superstorm Sandy, the German floods of 2013, and typhoons in the Philippines and Vietnam in 2013 and 2017, respectively. Most are from the past 30 years, but it also contains older case studies, including the Ohio River flood of 1937 and the Ashgabat Earthquake of 1948 in Turkmenistan.
It will provide users with data visualisations and other tools to assess the insurance industry's role in helping communities impacted by disasters get back on their feet as quickly as possible. It shows, for example, that while the Bangladesh floods and Sandy had similar damage severity levels (in terms of the proportion of building and infrastructure value lost) of between 60 percent to 80 percent, they had very different recovery profiles. In Bangladesh, the proportion of insured loss was only 0.05 percent, and economic recovery speed took six to 11 months, with the recovery quality worse than before the disaster. For Sandy, with insured losses of 46 percent, the economic recovery was under six months, and the economic recovery quality was the same as before the disaster.
The hub draws on a recent report by the Centre for Risk Studies in partnership with AXA XL, Optimising Disaster Recovery, which reflects years of research into how disaster recovery has been tackled around the world. It highlighted global annual average losses from natural disasters rising from $27 billion during 1970-80 to nearly $200 billion during 2010-2019. That was driven chiefly by global economic development and the rising value of assets in hazardous areas, particularly in fast-growing regions such as Southeast Asia.
“The gap between well managed and badly managed disasters is striking and, unfortunately, it is always the poorer communities who bear the brunt, be it in developed or emerging economies,” said Jonathan Gale, chief underwriting officer for reinsurance at AXA XL.
“Climate Risk is at the heart of this study, and it is important to remember that risk is a function of hazard, exposure, and vulnerability,” he added. “Changes in Climate Risk are not just driven by a changing hazard; understanding exposure change and the vulnerability of that exposure as values and wealth builds in cities, particularly in emerging economies, is critical to understanding the ever-increasing gap between economic loss and insured loss.”
Oliver Carpenter, environmental risk research lead at the Cambridge Centre for Risk Studies, added: “We hope the new Cambridge Centre for Risk Studies Disaster Recovery Hub will prove an invaluable tool to public officials, companies, NGOs and others who play a role in disaster recovery efforts. The assembled case studies provide contrasting narratives of success and failure in recovering quickly from catastrophes and building disaster resilience, and clearly outlines the important role played by insurance in these endeavours.”
