Natural disaster risks

Each year, natural disasters around the world destroy assets worth hundreds of billions of dollars. In many cases, only a small portion of the loss is insured. While the insurance gap in industrialised countries has narrowed in recent years, it remains unchanged in developing and emerging countries that are particularly susceptible to disasters: following many loss events from storms, floods, landslides and other disasters, people and businesses affected are left to bear virtually the full brunt of the losses themselves. They frequently rely on subsidies and donations from their own country or from abroad.

When the rising trend in both overall and insured natural disaster losses first emerged in the 1970s, Munich Re was quick to identify the greater need for expertise in this field. Since then, its experienced scientists and insurance experts have been analysing and assessing the full spectrum of natural hazards, ranging from cyclones, severe thunderstorms and floods to earthquakes and volcanic eruptions. 

Risk analyses reflecting the current state of scientific knowledge form the basis for risk models, the range of natural hazard covers for our clients and the development of innovative insurance solutions.

Earthquakes, storms, floods and droughts: only roughly a quarter of natural disaster losses were insured at the start of the 1980s – even in highly developed industrialised countries. Today the average figure is still no more than half. In emerging and developing countries on the other hand, the situation has remained unchanged for decades: the insured portion is still well under 10%, and in many cases it is virtually zero. And yet the broader use of insurance, especially in developing countries, could help people cope better with financial losses following natural disasters and help them resume their daily lives as quickly as possible. Munich Re is making important contributions in this area and developing innovative insurance solutions – some of them in collaboration with NGOs, partners in the public sector, and supranational organisations. Insurers help to avoid losses by accurately assessing the risks. 

Munich Re identifies and analyses changing or emerging risks from natural hazards, including changes resulting from climate change and natural climate variability. The aim is to thoroughly assess the loss potential from natural hazards and to promptly harness findings on changes for the purposes of our own risk management and for the benefit of our clients.