Pacific Rim economies’ exposure to the increasing threat of natural disasters has provided impetus for governments and the private sector to jointly address the need for more robust safeguards in the region.
Finance officials from the 21 APEC member economies, the world’s most disaster affected region, ramped up their collaboration to improve risk assessments and insurance coverage during meetings that concluded recently in Lima. The focus was on narrowing gaps in data gathering and financial protection needed to build economic resiliency among them, boosted by policy inputs from disaster risk experts from the OECD, the World Bank and industry.
“About two-thirds of reported disaster losses in APEC economies are uninsured on average and vulnerabilities in the region’s developing economies are even more severe,” noted Gregorio Belaunde, director of risk management at the Ministry of Economy and Finance of Peru, who guided the proceedings. “Quantifying disaster risk exposure is a prerequisite for reducing financial protection gaps which APEC is working to facilitate as climate change raises the stakes. It also helps to reduce physical disaster risk.”
APEC economies collectively account for about 3 billion people, half of global trade, 60 percent of total GDP and much of the world’s growth. They also experience more than 70 percent of all natural disasters and these are increasing in frequency and intensity as a result of climate change. Significantly, APEC economies incurred over USD 100 billion annually in related losses over the last decade.
Officials pinpointed the components of disaster risk as well as the technical requirements for model development and data gathering necessary to accurately assess them, drawing on best practices and case studies from the public and private sectors. They also shared real world lessons and guidance for creating systems that bring insurance companies together to form ‘catastrophe insurance pools’ that can rapidly boost insurance penetration.