Hitting the poor: Public–private partnership as an option

Abstract

NatCatSERVICE, Munich Re's global loss database, confirms that the number of catastrophes due to natural extreme events has been increasing since the 1980s. The annual average number of disaster events since 2002 is greater than 800. Since 1980, more than 2.2 million people have lost their lives due to the natural catastrophes; the relevant financial losses are estimated to be about US$3500 billion (in 2011 values). The two deadliest disasters were caused by earthquakes/tsunamis: the 2004 Aceh-Sumatra earthquake followed by a tsunami, and the 2010 Haiti earthquake. Each claimed more than 220 000 lives. In terms of absolute overall losses, rich countries like the USA or Japan carry the largest burden. The two costliest disasters around the world were caused by an earthquake and a hurricane: the 2011 Great East Japan earthquake with a direct overall loss of US$210 billion and the 2005 Hurricane Katrina, which hit New Orleans, USA, with a direct overall loss of US$125 billion (both in original values). The relative load on the economies is a different matter. Measured in terms of gross domestic product (GDP) and purchasing power parity, the impact on country groups with a low per-capita income is disproportionately high. For the people in developing and emerging countries, natural catastrophes often lead to a loss of their basis of existence and/or prospects for the future. Appropriate insurance protection can be of assistance. If we divide the world into an ‘insured’ world and a ‘non-insured’ world, we see that insurance penetration is low to non-existent in the poorer country groups.