Low insurance penetration continues to pose a growing threat – Tokio Marine




Low insurance penetration continues to pose a growing threat – Tokio Marine | Insurance Business America















Study highlights role of insurance and reinsurance in mitigating financial burden due to weather-related events

Low insurance penetration continues to pose a growing threat – Tokio Marine


Reinsurance

By
Kenneth Araullo

A new study, the Resilient Cities Index, conducted by Tokio Marine Group and Economist Impact, highlights the lack of infrastructure and effective environmental policies in cities worldwide to address the growing impacts of climate change. The study emphasizes the crucial role of insurance and reinsurance in mitigating the financial burden on individuals and businesses due to climate-related events.

One significant issue identified is the low insurance penetration in urban areas. This gap leaves individuals vulnerable to financial hardships in the face of unforeseen events, such as natural disasters, accidents, or health emergencies. The absence of adequate insurance coverage not only affects individuals and families but also undermines the overall resilience of cities. Urban centers, facing diverse risks like climate change-induced disasters, cyber threats, and infrastructure failures, struggle to recover and rebuild without sufficient insurance support.

The report points out that many global cities lack adequate insurance measures to counteract the effects of a more volatile climate and the increasing frequency of extreme weather events. These events, ranging from hurricanes to wildfires and severe storms, are occurring more often in regions previously unaccustomed to such extremities.

Insurance penetration in world’s major cities






























Rank

City

Score

1

Hong Kong

100

2

Cape Town

60.3

3

Los Angeles

59.3

3

New York

59.3

5

Singapore

54.5

6

London

53.8

7

Paris

50.7

8

Amsterdam

44.6

9

Tokyo

33.1

10

Munich

30.9

AVERAGE

28.7

11

Bangkok

25

12

Barcelona

21.8

13

New Delhi

18.5

14

Shanghai

17.1

15

Santiago

15.6

16

Melbourne

14.1

17

São Paulo

13.7

18

Dubai

13.5

19

Warsaw

10.1

20

Mexico City

10

21

Jakarta

5.7

22

Istanbul

4.5

23

Cairo

1.1

24

Dhaka

0

24

Lagos

0

Chris Williams, vice president executive officer and co-head of international business at Tokio Marine Group, underscores the growing frequency and severity of extreme weather events globally. He notes that emerging risks, stemming from technological dependence and changing demographics, are expanding the range of challenges cities must confront. Williams acknowledges the difficulty in projecting future risks but emphasizes the insurance industry’s responsibility to its customers and society.

“We have seen, firsthand, the vital role which insurance can play in driving market maturation in emerging economies and how, by increasing insurance penetration, we can help businesses and communities back on their feet, swiftly, furnished with the means and expertise to rise stronger. The insurance industry must do more to convince businesses and policymakers globally of its value and capacity to insulate against an increasingly volatile climactic and technological risk landscape,” Williams said.

The Resilient Cities Index calls for heightened awareness and implementation of initiatives to enhance insurance accessibility and affordability for urban residents. The study makes a strong case for the insurance industry’s increased involvement in equipping businesses and policymakers globally to manage the risks associated with an increasingly unstable climate and technological landscape.

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