No silver bullet for managing disaster risk: Allianz Re

There is no silver bullet when it comes to managing disaster risk, but the reinsurance industry is duty bound to help governments mitigate and better cope with disaster losses.

This is the view of Amer Ahmed, the chief executive officer (CEO) of Allianz Re, who believes the industry needs to find ways to partner with governmental bodies to reduce risk exposure.

“Reinsurance is the business of managing uncertainty. It’s a very powerful mechanism to provide relief post-disaster,” he said.

“Reinsurance can take a lot of the pain out of both the human and financial sides of disasters, if the programmes are set up effectively and if the finance is liquid and made available quickly. Clearly, I’m not saying that we are currently in a perfect system which works optimally, but in the future it certainly can.”

Ahmed believes that the role of reinsurance in society is not only to provide a product, but also to raise awareness of and help mitigate risk.

“The beauty of reinsurance is that it is a global business, which has many different types of risks and geographies within in its scope. Even a large country would struggle to balance one risk off against the other like the reinsurance industry does,” explained Ahmed. “If re/insurance works effectively, countries would be less damaged by disasters and the economic costs should be smoothened over time.”

However, one challenge in developing markets is the time it takes for the insurance industry to increase penetration.

“We must be realistic. In many developing countries, insurance is not the top priority for many people. This is where the partnership with government bodies comes in to play. The industry must talk about how risks could either be mitigated or managed in a way which is seen as trustworthy.”