Asia must harness insurance to develop resilience, says ADB

Asia must harness insurance to develop resilience, says ADB | Insurance Business

Asia must harness insurance to develop resilience, says ADB

Amid escalating disaster losses in the region, Asia’s developing economies urgently need to build their resilience through better planning, setting aside government budget, and encouraging insurance, according to research by the Asian Development Bank (ADB).

“Four out of every five people affected by natural hazards live in Asia,” said ADB chief economist Yasuyuki Sawada in Asian Development Outlook (ADO) 2019, the international institution’s flagship economic publication. “Asia has led the way on disaster risk reduction efforts in recent years, but more action is needed to tackle both vulnerability and responses at the national and the community level.”

Poor and marginalised households, small businesses, and small and remote countries such as the Pacific island nations bear the brunt of natural disasters. And although climate change helps create more natural hazards and rapid urbanisation is increasing exposure to risks, only around 8% of Asia’s total catastrophe losses since 1980 have been covered by insurance, the study said.

Read more: Zurich: The world seems to be “sleep-walking into environmental catastrophe”

The report urged developing Asian countries to continue to reinforce disaster risk planning. Climate-friendly and disaster-resilient infrastructure is particularly cost-effective in reducing future disaster-related losses. The ADB suggested better water resource management to deal with droughts, earthquake-safe community buildings, and rebuilding mangrove forests to mitigate coastal erosion.

Furthermore, it advised governments to routinely set aside funds that can be mobilised in case of disaster as well as increased use of credit and insurance, particularly through risk transfer products and r-insurance, to allow for a broader pooling of risk.

These national efforts should be complemented by action at community level, such as community waste management and other programmes that can build resilience, as the community is the first port of call for support and local knowledge after disasters strike.

The report noted that governments and the private sector should not focus solely on rapid rebuilding after disasters. Attention should also be given to strengthening resilience to future hazards, considering the needs of the vulnerable segments of society, and restoring the economic and social dynamism of the affected area. The key to this, the ADB said, is collaboration among central and local government, non-government organisations, and the community in disaster response as seen following the earthquake in Nepal and Cyclone Pam in Vanuatu, both in 2015.