Large insurers report significantly increased damage caused by natural disasters. At the same time, they recently booked record gains. How does that fit together?
If water evaporating over the warm ocean rises to storm clouds and this air turns more and more, then a hurricane can form; called Taifun in East Asia, feared as hurricane in Atlantic regions. Something is brewing a lot this year too. The reinsurer Munich Re expects an above-average hurricane season.
How many of these storms will cause fatal devastation is unclear. It is now certain that the number of natural disasters increases. “The trend clearly shows a growing number of natural disasters and rapidly increasing damage. We have to prepare for that,” says Arne Holzhausen from the Insurance Group Allianz.
Damage in the three -digit billion dollar height
Because a direct connection between the global rise in temperature and a growing number of natural disasters is now considered undisputed. Last year alone caused storms, earthquakes, forest fires and other disasters, according to estimates by the reinsurer Munich Re damage of $ 320 billion.
The weather is held responsible for 90 percent and a third of this damage was insured. This means that the insurance companies had to stand up for almost $ 100 billion. Behind them are the large reinsurers, i.e. the insurance insurance companies.
Make money out of the disasters?
However, the asset is increasingly passing on its risks to the financial market, through so-called disaster bonds or CAT bonds. “Basically, such a bond is a reinsurance contract that is traded,” explains Dirk Schmelzer from plenum investments.
The bonds that are offered exclusively to large financial professionals – i.e. the so -called institutional investors – promise high interest rates, but the risks are not without. In the event of damage, total loss is threatened because the bond buyers are liable from a certain amount.
Better better than pay later
This is a way to counter the growing risks from natural disasters. Economist Holzhausen pleads more for a global rethink: “How can we prevent this damage in advance? How can we prevent the costs from getting lower despite increasing risks?”
Building storm and earthquake-proof building would be such a step. You could already protect houses, streets and bridges from flooding, even if they are not yet considered endangered. But the costs grow over the head and those affected. In the end, insurance will jump into the breach. In view of the growing risks, this also means significantly increasing costs for their customers.
