Recent storms prove case for infrastructure upgrade; insurers should lead: Swiss Re
A string of storms across the UK are making clear the case for increased climate resilience as they lay bare the beleaguered state of infrastructure, a key P&C leader at Swiss Re has argued. Insurers must step up as investors and catalysts for reducing risk.
“The effects of climate change will only drive more extreme weather events like this in the years to come, so this is yet another reminder of why we urgently need to strengthen resilience across the country,” Simon Welton, market head of Swiss Re’s UK & Ireland P&C operations, has said.
The UK has to live up to or beyond the Johnson government’s “New Deal for Britain” plan and the insurance industry can be brought in to help fund the upgrade – and the greening – of resilience-based infrastructure.
“What exactly emerges from this plan is yet to be seen but what is clear is that the infrastructure we build needs to be environmentally sustainable and resistant to the rising frequency and severity of natural hazards,” Welton said.
Insurers should be present as investors, de-riskers and adept wielders of big data, Welton said.
As investors, insurers can finance sustainable projects for increased resilience. As de-riskers, the industry could “build a longer-term investment framework” where new insurance offerings make cashflows “more predictable,” and in turn, make the asset class more attractive to investors. As wielders of big data, insurers should lead the way in pointing out vulnerabilities.
“This moves us from a world where insurance does not just finance the reconstruction after the loss, but more importantly finances activities to prevent the loss,” Welton said.
Comments come as the UK suffers a one-two punch of one-two punches, with storms Dudley and Eunice following just weeks after twins Malik and Corrie.
Dudley’s 81 mph winds caused “widespread power outages” and Eunice has triggered a ‘danger to life’ warning from the Met Office. 2020’s Storm Dennis is still remembered for £475 million in economic loss, including 1500 properties flooded, plus six fatalities.
“As well as the economic, insured and human loss caused by the increasing frequency of extreme weather events, these incidents have highlighted the vulnerability of our UK infrastructure system,” Welton claimed.
Disruptions to infrastructure, crucially electricity and transport infrastructure, have kick-on effects throughout the economy, Welton reminded.
