Aon calls for private and public sector collaboration to address the protection gap and build resilience against catastrophes
Over the last decade, natural catastrophes have resulted in global economic losses of USD2.98 trillion. Only USD845 billion of this has been insured, creating a protection gap of 72%...
Aon plc brings together leaders across the private and public sector for its inaugural "Collaborating to close the protection gap" conference in London.
The event is designed to generate discussion on how the global finance and insurance industry can work more effectively with governments, humanitarian and non-governmental organisations. As losses from natural catastrophes continue to reach record levels, the goal is to close the gap between the insured and uninsured to protect global communities and build scalable solutions through shared experiences.
The conference is hosted by Aon in partnership with the City of London, The British Red Cross, ClimateWise, Insurance Development Forum, AXA XL, Pool Re, MSAmlin and Renaissance Re at London's Guildhall. Speakers include Cyrus Ardalan, Chairman – International Finance Facility for Immunisation; Lord Bilimoria, Vice President – CBI; Greg Case, CEO, Aon plc; Marisa Drew, CEO – Credit Suisse Impact Investment and Advisory; Nick Dyer, Director General for Economic Development and International at the UK Department for International Development; Dr. Abbas Gullet, former Secretary General – Kenyan Red Cross; David Lomas, Managing Director – BlackRock; Julian Richardson, Insurance Specialist – Department for International Trade and William Russell, Lord Mayor of the City of London.
Today's event opened with a video message from The Prince of Wales: https://aon.io/HRH-ProtectionGap
Greg Case, CEO, Aon plc, said: "The protection gap places an immense financial strain on governments, businesses, communities and individuals. Yet, financial impact is only one aspect of the toll these disasters inflict. We also must consider the profoundly troubling humanitarian and social impact – lives lost, communities compromised and businesses, as well as individual livelihoods, disrupted.
"Considering the magnitude of the challenge, a solution is beyond the ability of any individual, organization or even sector. We have absolute conviction, though, that, collectively, we can make a difference. Our hope is that we will forge a shared commitment to new ways of collaborating that will allow us to build resilience at scale."
Aon's Weather, Climate & Catastrophe Insight: 2019 Annual report found that 2019 was another year of devastating natural disasters around the globe with economic losses of USD232 billion. Only USD71 billion of this was covered by insurance, leaving the protection gap – the portion of economic losses not covered by insurance – of 69 percent. Over the last decade, natural catastrophes resulted in economic losses of USD2.98 trillion and insured losses of USD845 billion, creating a protection gap of 72%.
The decade also highlighted the significant protection gap that persists in developing and emerging countries. No part of the world was more vulnerable to this topic than in Asia, where just 12 percent of economic losses – USD151 billion out of USD1.23 trillion – were covered by insurance. In Latin America and Africa insurance take-up rates were in the low single-digits, meaning that virtually all losses were uninsured and local populations were entirely dependent on federal or international financial support for recovery.
The development of new insurance schemes, such as parametric insurance, insurance risk pools, or catastrophe bonds, will be important new ways to improve risk mitigation in the most vulnerable areas.
Simon Meldrum, Innovative Finance Specialist, British Red Cross, added: "Our vision is of a world where every community is resilient to the impact of the climate crisis, both today and in the future. With a presence in almost every country in the world, we see first-hand the humanitarian impact of increasingly volatile weather. We are also one of the biggest organisations in the world responding to natural disasters and people in crisis. In addition, we are working in disaster risk reduction through our Climate Centre and other specialists across the Red Cross. We are now starting to explore new ways of working with private sector partners and pilot some exciting initiatives such as insurance linked securities or catastrophe bonds because we believe that cross-sector collaboration with governments, the insurance sector and non-governmental organisations will be critical to shifting the dial in the humanitarian response."