Protection from perils
Fires, floods and earthquakes are as old as time, yet they continually present new challenges. Fortunately, we've never had better tools allowing insurers to underwrite these challenges with confidence.
These events warrant our attention due to their growing frequency and cost. In 2018, total economic losses from natural catastrophes were $161 billion, of which $81 billion was insured. Of that amount more than 60% of claims resulted from secondary peril events.
Our latest sigma reveals what’s behind the rising costs – rapid development in areas exposed to severe weather conditions and climate change – and what’s being done to defend our assets from the ravages of primary and secondary perils.
Secondary is primary
What’s a secondary peril? Consider the recent California and Canadian wildfires. The primary peril in this case is drought, which creates favorable conditions for fire, which is the secondary peril.
Secondary perils are taking on primary importance. In fact, the largest natural catastrophe insurance loss of 2018 was the Camp Fire in California ($12 billion), which is classified as a secondary peril.
Another all-too-common secondary peril is flooding, which until now has been difficult to accurately model and insure. When a Midwestern summer storm boils up or a hurricane rolls ashore and the resulting surge causes destruction, it’s in our best interests to be properly protected.
An estimated 5 in 6 US households don’t have flood insurance, but that’s changing. Swiss Re is working to make flood coverage available in the private market. We’ve developed a model that allows us to underwrite to the individual exposure. And our clients are launching new flood products, offering coverage as part of a traditional homeowners policy. Learn more at our dedicated US flood page.
In Canada, wildfire is a secondary peril that's becoming a primary concern. Wildfires triggered insured losses of almost CAD 5 billion between 2003 and 2017, and even higher economic losses.
As people living in wildland-urban interface areas continues to grow, and longer periods of warm, dry weather lengthens fire seasons across Canada, accurate wildfire risk assessment will become increasingly important. Read how we’re working to improve wildfire risk modelling via new real-time techniques that use big data and artificial intelligence.
While there are often signs a wildfire is approaching, that's not the case with an earthquake. Three of Canada’s largest cities – Montreal, Ottawa, and Quebec City – are in seismically active zones and we estimate that a magnitude 7.3 earthquake near Quebec City could result in total losses to residential property alone of CAD 10.6 billion.
Small business solution
In California earthquake is also a significant risk and at present, much of the losses the state would suffer would be uninsured. However, we're addressing that with a new parametric solution for small business owners called Quake Assist which helps them meet their expenses and protects their revenue streams after an earthquake. Learn more here.
Let us help you tap new markets or improve the performance of your existing portfolio by applying our expertise and solutions. Contact us today.