Natural disaster impact pegged at US$520 billion

Costs of global natural disasters, including the cost for the Australian industry, are unveiled

Insurance News

By Jordan Lynn

The true cost of the impact of natural disasters has been revealed as the ICA also highlighted the latest catastrophe cost for the Australian industry.

A new report published by the World Bank and the Global Facility for Disaster Reduction and Recovery (GFDRR) pegged the economic impact of natural disasters worldwide as equivalent to a global US$520 billion loss in annual consumption.

The report, published this week, follows the latest catastrophe declaration from the Insurance Council of Australia (ICA) for a major hailstorm around Mildura as well as the recent earthquake in New Zealand.

Thus far, the ICA has said that insurers have now received 13,200 claims following hail damage with insured losses estimated at $71 million.
The global US$520 billion estimated in the report, entitled Unbreakable: Building the Resilience of the Poor in the Face of Natural Disasters, outstrips all other estimates by as much as 60%.

World Bank Group president, Jim Yong Kim, said that resilience-building measures are paramount to lessen the burden of natural disasters.

“Building resilience to disasters not only makes economic sense, it is a moral imperative,” Kim said.

A first of its kind, the report assesses the benefits resilience-building interventions can have including access to insurance, early warning systems and other measures.

The report finds that a combination of these measures could save communities worldwide US$100 billion per year and also reduce the overall impact of natural disasters on well-being by 20%.

Stephane Hallegatte, a GFDRR lead economist who led the preparation of the report, said that the impacts of climate change are being felt by some of the most vulnerable people in the world and called for more mitigation.

“Countries are enduring a growing number of unexpected shocks as a result of climate change,”Hallegatte said.

“Poor people need social and financial protection from disasters that cannot be avoided. With risk policies in place that we know to be effective, we have the opportunity to prevent millions of people from falling into poverty.”

Related stories:
Insurance Council declares storm a catastrophe
Industry gears into action following fatal quake

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