AXA XL, the property & casualty and specialty risk division of AXA, has partnered with the Cambridge Centre for Risk Studies on a study exploring the role re/insurers play in disaster recovery, and plans to launch a new Disaster Recovery Board.
The firm also plans to create a new open source database using the results of the study.
The study demonstrated that economies and societies are generally able to recover far more quickly in countries with a higher insurance penetration, leaving the poorer communities to suffer the most.
At the same time a country like the US, with high penetration but an overly complex insurance market, proved to encounter its own challanges when recovering from a catastrophic event.
Representing AXA XL in their webinar was Andy MacFarlane, leader of AXA XL’s public sector partnership, who was joined by Dr Andrew Coburn and Ollie Carpenter from the Cambridge Centre for Risk Studies.
Coburn explained how the study looked more closely at the recovery of an economy rather than metrics such as homelessness and the destruction of physical infrastructure.
The team began with eight fairly detailed case studies of individual catastrophes picked from a wide range of geographies and economic conditions.
They included highly developed economies like the US and Germany and the UK and combined them with emerging economies.
“What we were trying to establish is how long does it take for the economy to recover in and for society to reassemble itself, get back on its feet to the situation it was before the catastrophe occurred,” Coburn explained.
“And in some cases, whether you can you utilise the catastrophe itself to improve conditions, and most importantly, to improve the resilience to the next catastrophe that could occur in the future.
“it’s not just about rebuilding the shops and houses and factories, it’s about how you get the demand and supply back in sync.”
He went on to explain how disaster impacts governance and decision making, as well as the sort of disaster risk management processes and critical disaster financing.
“Two of the key results we found were that places with adequate and speedy funding recover faster and when there’s increase in insurance,” Coburn said.
MacFarlane then noted how expanding insurance capacity and closing the protection gap can improve resilience and recovery outcomes.
It’s becoming more common that re/insurers are noticing the positive impact the industry has on a society, especially developing ones. They’re becoming increasingly aware that the industry will need to establish climatic, seismic and financial risk modelling to develop innovative catastrophe re/insurance products.
