Insurers can help governments – von Bomhard

Governments must get better at preparing for and managing natural catastrophe risks if they are to reduce risk. That is the opinion of Nikolaus von Bomhard, CEO of Munich Re and former chairman of the Geneva Association – an economic think tank, which held a press briefing in London to coincide with its 40thanniversary.

Von Bomhard was speaking as part of a panel discussion that also included Michael Butt, chairman of AXIS Capital and Margareta Wahlström, special representative of the secretary general for Disaster Risk Reduction. They echoed the view that governments could reduce disaster risk by cooperating with insurers.

“The objective is to educate and develop an understanding of insurance; governments don’t understand what insurers can offer,” von Bomhard said.

The conference followed the release of a report by the association called ‘Insurers’ contributions to disaster reduction’, which examines existing collaborations between insurers and governments around the world on managing disaster risk.

“Climate change dropped off the agenda after the financial crisis, but it’s moving its way back up,” said von Bomhard. “We have provided 12 case studies of what insurers and governments should and can do to reduce disaster risk.”

AXIS Capital’s Butt was also keen to stress the importance of education. “Our understanding of risk management, which is improving in leaps and bounds, is very important when assisting governments in knowledge and risk,” he said.

“They [governments] are more focused on the immediate, emotional reactions and recovery rather than planning, which is not always sensible. Our pricing knowledge is a real value to the industry. We can be helpful before and after events.”

Both von Bomhard and Butt expressed concerns over countries being left to fend for themselves. “No nation can manage disaster risk alone,” said Butt.

“We have a social responsibility to spread the word that countries cannot afford to take the risk. The industry paid out $108 billion for the 2011 losses. It was a very bad year for unexpected losses, however, the Thai floods should have been predicted had someone looked at the increase in infrastructure and the disaster records over the last 15 years.”

A unified agreement that innovation within the industry was needed was a clear point of discussion.

Wahlström spoke of China’s new five year strategy which focuses on managing the risk.

“Over the past decade we’ve seen how risk accumulation and economic growth go hand in hand,” she said. “China now has a new five strategy, which has changed from managing the events, to managing the risk.”