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11th March 2012

Geneva Association reviews catastrophic year and looks forward

The Geneva Association has published Geneva Report No 5 Extreme events and insurance: 2011 annus horribilis, a global and detailed picture of the major 2011 natural catastrophes and an analysis of the role and mechanisms of insurance in managing climate risk and other extreme events.
The report comprises nine essays by leading insurance academics, economists and insurers that underline the significant importance of risk adaptation and management measures in developing physical and economic resilience to natural catastrophes, including the important role of insurance in such mechanisms. It also provides the implicit “lessons learned” from the catastrophes that will enable better risk assessment and adaptation to similar risks in future.
"Predictions suggest that by 2025 more than 5.5bn people worldwide will live in cities and a large proportion of them close to regions prone to extreme events," said Walter R. Stahel, vice secretary general and head of the Risk Management Programme of The Geneva Association. "It is also likely that powerful extreme events will affect several of these large urban areas in the coming decades. Governments and decision-makers should keep the dramatic events of 2011 in mind and recognise the potential seriousness of this situation. The insurance industry is one part of any solution for efficient catastrophe risk management. Without a real effort from all stakeholders, including governments, to develop and implement such programmes, it seems inevitable that the worst is yet to come."
Michael Butt, chairman of AXIS Capital Holdings and co-chair of The Geneva Association’s Climate Risk and Insurance Project said "The nature and scale of the challenge of natural catastrophes is greater than can be covered by insurance alone. The principle reason for increasing damage and loss figures are more socio-economic changes rather than changes of natural variability. A closer cooperation and collaboration between governments, industry and insurers is needed to manage disaster risks and to reduce the financial impact of extreme events."