by Steve Evans
The University of Cambridge Centre for Risk Studies has updated its annual Global Risk Index, finding that the value of gross domestic product (GDP) at-risk from catastrophic events continues to rise, but highlights insurance capital as a key tool for global recovery.
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The Global Risk Index analyses the potential impacts of catastrophic events, including natural catastrophes, to 279 major cities around the world that account for 41% of global GDP.
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Andrew Coburn, Chief Scientist, commented, “Corporate risk is escalating along with the cadence and ferocity of climate-related catastrophes. While reinsurers saw a year of below-average insurance losses in 2019, they remain wary of events that could generate record losses like the 2017 hurricanes and an increasing number of wildfires. As such, ratings agencies predict premiums could rise as much as 5% from January. Power outages, like those forced by the Californian wildfires, have also highlighted the ripple effects impacting societies and their ability to manage throughout, and recover from, catastrophic events.
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As the world becomes increasingly connected and values-at-risk soar, the need for efficient insurance and reinsurance capital to support the global recovery from catastrophes is going to be key, with the role of ILS set to increase as a result.