Looking at the unexpected – Munich Re urges to increase resilience against the consequences of natural catastrophes
Weather catastrophes are on the rise and natural disasters currently cost the Australian economy A$ 6.3bn per year. This amount is expected to increase to about A$ 23bn by 2050, according to the Australian Business Roundtable (of which Munich Re is a founding member). The Australian government spends over half a billion A$ annually on post-disaster relief and recovery, but only A$ 50m on pre-disaster prevention and mitigation.
Sydney. According to Munich Re’s database, natural catastrophes have almost quadrupled in Australia since 1980 and global warming is projected to intensify the severity of many events. Immense insurance and reinsurance capacity as well as sophisticated risk solutions are required to deal with these changes.
With its latest publication “Expect the Unexpected”, Munich Re’s leading experts share their views on the current situation and future outlook regarding natural hazards and risks in Australia and New Zealand.
Climate swings such as El Niño and La Niña change hazard and risk levels by altering probabilities for drought or heavy rainfall in eastern parts of the country. In the future, the number of cyclones with moderate to medium intensity, for example in northeast Australia, could fall by 15% to 35%, while the number of very intense storms will increase. And with them the risk for communities and insurers. Also, an increase in days with conditions prone to severe thunderstorm and hail in major cities in the east is expected, locally reaching 30% by the end of the century.
Due to global warming, the sea level in Sydney and the East Coast could rise by 0.66 metres by the 2090s relative to the 1986–2005 average, and the frequency of extreme droughts in Australia could increase by one and a half times.
Then there are earthquakes: Major Australian cities are located within regions of elevated seismicity, which translates into a potential for earthquakes of 6.0 magnitude and greater in conurbations such as Perth, Adelaide, Melbourne or Sydney, potentially leading to very high insured losses. Recently, the Christchurch earthquake series of 2010–2011 provided an example for such rare and high-impact events.
With the expected increase in losses from changing exposure and hazard conditions, the need for risk mitigation is urgently rising. Mitigation means taking action now, before the next disasters happen, to reduce the negative human and financial impact. Mitigation includes reducing risk and insuring against it.
“Recent years have demonstrated that the industry needs to focus more on the unexpected”, says Ludger Arnoldussen, Munich Re board member responsible for Australasia. “We clearly know that such catastrophes will hit Australia and New Zealand more often and harder, unclear is just exactly when and where. With this publication we want to highlight such scenarios and help our clients and communities to be better prepared.”
“We are very committed to the Australian and New Zealand markets. For over 60 years we have been offering local and global experience and financial strength, and have built up a deep expertise on all kinds of natural hazards”, says Heinrich Eder, Managing Director of Munich Re in Australia. “When it comes to local engagement, we are honoured to be a member of the Australian Business Roundtable, where we actively support the development of a national approach to create more resilient communities.”
The publication “Expect the Unexpected” is available online:
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