Water

According to current estimates, the population of the world will grow from today's 6.3 billion to more than 9 billion in the year 2050. The standard of living and the degree of industrialisation will also increase. Correspondingly, global consumption of water will reach new heights. At the same time, however, available freshwater resources are diminishing.

The quality of water is deteriorating too, as a result of the increasing pollution of drinking water reserves by agriculture, industry, and private households. The regionally specific problems concerning the availability and quality of water will be aggravated and accelerated by the effects of climate change, with many areas experiencing increased drought and flood events.

Extreme situations are to be expected especially in the megacities, which continue to grow in size and number. Water is constantly gaining in significance as an economic factor, e.g. in the privatisation of water supplies and as a central process component in water-intensive sectors.

Changes in the global availability and quality of water may also influence Munich Re's insurance risks. We have therefore examined in depth the extent to which Munich Re can be prepared ahead of time to cope with future developments and the areas in which it should adapt its insurance products. The examination concentrated on the effects on various areas of insurance, e.g

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  public liability and environmental liability claims resulting from increasing water pollution,
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  property claims resulting from contaminated or inadequate water supplies,
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  business interruption claims resulting from interruptions in the water supply,
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  product liability risks in the food and drinks industry,
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  morbidity/mortality resulting from water scarcity and pollution,
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  credit risks,
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  agricultural risks,
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  specific problems in megacities.

The results of this expert study show that in the various areas of insurance we must expect in some cases substantial effects on the risks and their assessability and elevated loss potentials (e.g. credit risks, terrorism risks). In this connection, the high risk potentials in megacities are likely to rise even further on account of the increase concentration in values and the fragile infrastructure of modern societies.

Munich Re provides its clients with the professional knowledge they need to cope with future underwriting risks in this area.