The UN Economic and Social Commission for Asia and the Pacific (ESCAP) has released a dire warning to businesses and Governments worldwide that economic losses due to disasters in Asia and the Pacific could exceed $US160 billion annually by the year 2030. The warning comes on a background of alarmingly low coverage in the region, where current figures reveal that only 8% of the region’s losses are insured.
ESCAP has urged all stakeholders to work together pursuant to their Framework for Disaster Risk Reduction to ensure that the rapid economic and social development, particularly in Asia, is matched by sufficient insurance coverage to protect against ongoing disasters. Whilst acknowledging the challenges are complex, ESCAP Chief Shamshad Akhtar states that the current low coverage arrangements are unsustainable, with the traditional cost burden following natural disasters falling to individuals, businesses and Governments to an estimated cost of over $US1.3 trillion in losses over the last 50 years. With growing concerns about population growth and a rise in extreme weather events in the region, the ability of these stakeholders to cope with future disasters appears to be rapidly reducing.
The headline figure of $US160 billion annually by 2030 should be a wake up call to all stakeholders, with the UN calling for innovative combinations of Insurance to solve the severe coverage gap which currently exists. Insurers should note the message of the UN, given that increasing global convergence could leave businesses and stakeholders across the globe over-exposed should a natural calamity occur and the current situation remain unaddressed.
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