International Day for Disaster Risk Reduction: climate change action key to reducing disaster risk; insurers may substantially contribute

13 October 2022 — Daniela GHETU
International Day for Disaster Risk Reduction: climate change action key to reducing disaster risk; insurers may substantially contribute
"Nothing undermines sustainable development like disasters," asserted United Nations Secretary-General Antonio Guterres in hir foreword to the sixth edition of the United Nations Global Assessment Report on Disaster Risk Reduction 2022 - "Our World at Risk: Transforming Governance for a Resilient Future comes at a critical time for the future of humanity."

"Addressing the challenges posed by climate change is vital for disaster risk reduction, as climate change results in more frequent and severe natural disasters. And insurers have a key role to play. This includes not just the financial protection we offer, but also incentivizing clients to reduce their risk exposures and assisting authorities in modelling the risks faced by their communities. Insurers also increasingly contribute by reducing their own carbon footprints," Nicolas Jeanmart, head of personal and general insurance at Insurance Europe, commented. He also added that "policymakers must also increase their efforts. This means, in particular, keeping as close as possible to the Paris agreement on the reduction of greenhouse gas emissions, achieved during COP 21. At the same time, significant policymaker action is required to adapt our societies to an already changing climate, for example via better land use planning and adequate building codes. Such action on adaptation is needed urgently at all levels: local, national, European and global."

Jeanmart's comment meet the conclusions of the UN Global Assessment Report on Disaster Risk Reduction 2022 and were expressed on the occasion of the UN's International Day for Disaster Risk Reduction. The United Nations General Assembly has designated October 13th as the International Day for Disaster Risk Reduction to promote a global culture of disaster risk reduction. It is an opportunity to acknowledge the progress being made toward reducing disaster risk and losses in lives, livelihoods and health in line with the Sendai Framework for Disaster Risk Reduction.

An excerpt from the report's pages in more than telling with regard to the role insurance plays in dealing with disaster risk reduction goals: "Between 1980 and 2018, on average, about 40% of all disaster-related losses were insured. However, insurance is overwhelmingly concentrated in richer countries. The insurance coverage rate in most developing and emerging economies is well below 10% and sometimes almost zero (Munich Re, n.d.). Private insurance products are often not available or affordable for people with low-value assets and low incomes. In the aftermath of a disaster, uninsured losses will typically be paid through the labor and personal financial reserves of affected people, government funds and international humanitarian assistance. This uncertainty and drain on State budgets pose an ongoing challenge for poorer countries to afford to compensate affected people and also undertake resilient reconstruction and rebuild social services. Economic loss of such proportions - especially when uninsured - can have serious future implications for poverty alleviation. It can undo years of progress, reverse development trajectories and divert State resources that might otherwise have gone to social protection, poverty reduction and hunger alleviation."

The report, offering valuable recommendations to reduce risk and increase resilience, is available for download here.

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