UN Stresses the Role of Insurance in Preparing for Major Disasters

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Insurance against damage to property can boost people’s resilience in the event
of disasters, the United Nations office on disaster risk reduction has stressed,
pointing out that only nine per cent of building owners affected by the last
month’s earthquake in Turkey had insured them.

“Insurance is not a panacea, but it helps individuals cope after suffering
losses from a big earthquake or storm,” said
Andrew Maskrey, lead author of Global Assessment Report for Disaster Risk
Reduction
, issued by the UN International Strategy for Disaster Reduction
(UNISDR).

“However, if countries don’t invest in disaster risk reduction then insurance
will not be affordable,” he said in an UNISDR article published yesterday on the
importance of insurance in disaster preparedness.

According to Turkey’s main earthquake insurance authority, limited awareness,
low incomes and lax enforcement are the reasons why most of those affected by
the quake in the country’s southeast on 23 October had no insurance for their
homes and other buildings. The 7.2-magnitude quake killed more than 600 people
and injured 4,000 others.

UNISDR cited the estimates of risk modelling firms which show that as a result
of the low levels of insurance in Turkey, claims related to the earthquake will
be worth some $170 million, compared to the $12 billion that insurance companies
paid out after the earthquake in New Zealand in February, and $22 billion in
claims following the quake and tsunami in Japan in March.

In rural Africa, where entire food crops are often destroyed by droughts or
floods, insurance could play a strong role in helping people recover, but
insurance awareness remains extremely low in the continent.

“Insurance could play a key part of any society’s ability to function in the
face of extreme catastrophe,” said Tricia Holly Davis, the Director of
Commercial Sustainability at Willis Re/Willis Research Network, a member of
UNISDR’s private sector advisory group. “But how do you explain insurance to a
society that has never used it?”

Ms. Davis said governments had a role to play in boosting community resilience
through insurance.

“There needs to be a lot more understanding about the level of responsibility
and resources that governments have,” she said. “How do you get governments to
budget for disaster risk reduction in national allocation plans? And as part of
that, what role does insurance play? Through the UN platform we are able to have
conversations with governments, to understand them better and, in turn, to help
inform policy.

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