The global catastrophe insurance market is expected to grow at a compound annual growth rate of 5.49% between 2016 and 2020, according to a new forecast from Technavio.
Catastrophe insurance helps protect people and businesses against natural disasters like earthquakes, floods and hurricanes. It also insures against “man-made” disasters like terrorist attacks. It’s useful coverage because it insures against events that generally have a low probability but a high cost – and these high cost events are usually excluded from standard hazard insurance policies, according to a news release from Technavio.
Catastrophe insurance does present challenges to insurers, according to the release. It can be difficult to estimate the total potential cost of an insured loss in the event of a disaster. That can make it hard for catastrophe insurers to effectively manage risk. Retrocession and reinsurance are generally used with catastrophe insurance to help manage catastrophe risk, according to the release.
Despite the difficulties, it’s still expected to be a growing space over the next four years, according to Technavio, with key vendors including
AIG,
Allianz and
Berkshire Hathaway. The company’s analysts found that there has been increased regulatory support for public-private cooperation in building a more resilient infrastructure – and effectively governing risk. That support, according to the release, is a key driver in the space’s projected growth.
