Risky cities: Bangkok

In the latest edition of its Risky cities series of publications, this time focusing on Bangkok, Swiss Re highlights the significant impact Thailand's 2011 flood had not only on thousands of individuals and dozens of companies but also on the economy and the public purse. It suggests that stronger private-public partnerships, underpinned by insurance industry expertise, could help strengthen the country's resilience should a major flood disaster happen again in the future.

The flooding caused economic losses of around USD 48 billion compared to insured losses of only USD 16 billion. Consumer spending, for example, declined sharply in the wake of a rise in joblessness, and the country's GDP also contracted sharply in late 2011 as a result.

In addition, the massive disparity between economic and insured losses meant that the government had to stump up substantial funds to make up for the shortfall. And all this was on top of the additional public spending necessary to strengthen water management and flood risk prevention measures.

To help reduce the financial impact of such flood risks should they re-occur, the insurance industry has much to offer to the various parties at risk. This can be in the form of sharing its risk management expertise and financial capacity to narrow the protection gap between economic and insured losses. Consequently, the report strongly advocates an ongoing dialogue between society, insurers and the public sector to establish public-private partnerships designed to further reduce the risk and help governments better prepare for the residual risk.

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