Has Brazil grasped the importance of insurance against the risks of flooding?

Even with a marked increase in the occurrence of flooding, putting more than 33 million people at risk, causing death and millions of dollars of damage, Brazil still hasn’t grasped the need to financially protect properties and lives against flooding by means of insurance coverage.

The seminar entitled "Risks of Flooding in Brazil: Impacts on the Insurance Market, Government and Society”, held on August 20th 2013 by Swiss Re in the Brazilian city of São Paulo, with support from the National Confederation of Insurance Companies, brought together an almost one hundred insurance specialists and members of the public in a wide-ranging debate. After the initial opening procedure, the program covered all aspects of flooding and its inherent risks, including participation by the Head of Reinsurance for Latin America South and the president of Swiss Re Reinsurance Brazil, Margo Black, and the Superintendent of Market Relations of the CNseg, Maria Elena Bidino, consisting of three separate discussion panels and concluding in a final debate.

Margo Black opened the seminar, highlighting worldwide concerns on the issues of flooding and the inclusion of Brazil in this particular context. “As risk underwriters, we can assist in mitigating loss of life and economic assets", stated Maria Elena Bidino of the CNseg. Worrying data regarding the increase in the Brazilian population exposed to potential flooding was revealed by a Swiss Re study, which estimated an increase from 33 million people, to 43 million people by 2030. The study also predicted that annual losses due to flooding in Brazil could increase from 1.4 billion US$ to 4 billion US$ in less than 20 years.

The first discussion panel “Utilization of information for the development of new products”, discussed government and insurance market initiatives for predicting and measuring floods. An agreement between the National Center for the Alert and Monitoring of Natural Disasters (Cemaden) and CNseg will soon provide Brazilian insurers with access to valuable information for underwriting risks associated with extreme climatic events.

The social impact of flooding and the role of risk management” was discussed during the next discussion panel, by risk management specialists from the World Bank and the United Nations (UN). According to a survey by the World Bank, these events have increased significantly over the last 30 years; a period which has seen losses of 3.5 trillion US$. Some 178 million people were affected in 2010 alone. It is estimated that in 2030, 60% of the world’s population will live in urban areas, with this figure rising to 70% by 2050.

A solution created by Swiss Re for calculating an appropriate premium for the risk of flooding was presented during the next discussion panel: “The importance of insurance and reinsurance, and Swiss Re experiences around the world”, which went on to discuss the large insurance deficit against flooding in Brazil. The significant difference between economic losses, in comparison to those which are actually insured, during recent catastrophic floods such as in 

Santa Catarina in Brazil in 2008, has tended to worsen. It is estimated that losses will reach up to 8 billion Brazilian Reais per year by 2030. Among current solutions being offered, Swiss Re recently established its Micro-insurance Catastrophe Risk Organization (Micro) program in Haiti, which has been offering protection to small business affected by disasters since 2011.

At the end of the seminar, the “Debate – what we can do and challenges to overcome” was held, focusing on, among other issues, the reasons for the low amount of interest in insurance against risks involving flooding in Brazil. The discussion panelists drafted out a set current prospects for this type of risk in Brazil, pointing out, on the one hand, the current investment priorities of the Brazilian government in reacting to natural disasters instead of trying to prevent them and, on the other hand, the little amount of interest on the part of the insurance sector in offering this type of protection.

Find out more about each discussion panel!

Use of information for the development of new products

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The social impact of flooding and the role of risk management

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The importance of insurance and reinsurance, including Swiss Re experiences around the world

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Debate – What we can do and the challenges to overcome

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