In a recent interview with Munich Re, Robert Glasser, Special Representative of the United Nations’ Secretary General for Disaster Risk Reduction and Head of UNISDR, highlighted initiatives underway to incorporate disaster risk management into the global regulatory environment.
He said the UN was establishing links to global financial sectors, collaborating with the Bank for International Settlements and the Financial Stability Board to improve global disaster risk prevention through regulatory schemes:
“We’ve found important opportunities to incorporate disaster risk into the global regulatory environment that sets the rules for the insurance sector around the world.
“The challenge is to work out what the appropriate role of the public sector is, because there has to be a compelling private-sector interest as well. It has to be win-win.”
Glasser said across the globe private and public sectors would benefit from closer partnerships on risk mitigation matters; “There are huge gaps in both rich and developing nations when it comes to understanding their exposure.
“Here, the insurance community can offer key support to countries and other stakeholders in raising awareness and laying the groundwork for risk transfer.”
Although risk transfer is one of the most important tools available to government’s for mitigating costs of risks – the UN previously reported re/insurance solutions being up to four times cheaper than emergency response – many countries remain unprepared and under informed on disaster prevention issues.
“Transferring risk is of course one of the most important tools countries have in managing risk. While countries need to do everything they can to reduce risk in other ways – by making sure they’re not constructing hospitals in flood zones, for example – at the end of the day, once they’ve done all they can they should have options to transfer a portion of the risk through insurance.
“In some countries, however, the regulatory framework makes it difficult for insurers to assume this role. Especially in communities that are marginalised, the insurance industry is in a unique position to develop suitable products like mutuals that can reach stakeholders who tend to be particularly vulnerable and exposed to hazards,” said Glasser.
Climate change especially is changing the scale and scope of risk exposure, meaning its more imperative than ever that countries have access to cutting-edge disaster risk data; “the past is no longer a reliable indicator of the risks you face in the future. The insurance industry has this data and is absolutely fundamental in the overall risk management programme,” Glasser said.
The UN representative added that an effective partnership would see governments embedding disaster risk management into their core economic planning, and the private insurance sector offering their risk data to assist these aims; “On a global level, it would be extremely useful if insurers would open up their data on risk and make it more available. I know in many cases it’s proprietary information, but I think there is a compelling shared interest – on the part of insurers as well – in pooling what we know where there’s a lack of open knowledge. This will enable better pricing of risks and open up markets, so more risk can be transferred.”
In addition to improving government’s regulatory schemes for disaster risk management, Glasser said the UN was working on micro insurance initiatives with the potential to act as blueprints for transforming re/insurance solutions in developing markets; “The UNISDR has a major private-sector partnership operating both at a global level with multinationals and at the regional level with very dynamic chapters of private-sector firms, particularly in Japan and the Philippines.
“This alliance, called the Arise Network, is developing a series of public-private partnerships to reduce disaster risk. Activities range from incorporating risk in the curriculum of business schools, fostering a new generation of executives with an understanding of disaster risk, to working with small to medium-sized enterprises to test their resilience and preparedness regarding disasters – and everything in between.”