GAR 2015 Main Report

102

Part I - Chapter 5

for recovery, reallocating funding and reducing the available future borrowing capacity for development as well, thus hampering future growth.

In most higher-income countries, a significant proportion of economic losses are insured. For example, in the July 2013 hailstorms in Germany and France, an estimated US$3.8 billion of the total losses of US$4.8 billion were insured, as were US$1.9 billion of the total losses of US$4.7 billion in the June 2013 floods in Canada (Swiss Re, 2014a). Furthermore, despite their size in absolute terms, these losses are rarely significant compared with annual capital investment in those countries.

In contrast, many countries with lower incomes and smaller economies, including least developed countries (LDCs) and small island developing states (SIDS), are severely challenged by rising economic loss. In such countries, most loss is uninsured and governments do not have the financial reserves or access to contingency financing that would allow them to absorb losses,

recover and rebuild. For example, while estimates of the total losses from Typhoon Haiyan vary, there is agreement that insured losses are only a small fraction of the overall loss due to low insurance penetration in the region. For example, AIR Worldwide estimates total damage at US$6.5 billion to US$14.5 billion, of which only US$300 million to US$700 million are thought to be insured.1 In fact, a considerable number of countries face resource gaps for events with return periods below 100 years. For example, while Canada and the United States would only face challenges in absorbing the impact from a 1-in-500-year loss, Algeria, Bolivia, Chile, Indonesia, Iran, Madagascar, Mozambique and Pakistan would face difficulties finding the resources to absorb the impact from as small as a 1 in 3-25 year loss ( GAR 13 paper

Williges et al., 2014

Williges, Keith, Stefan Hochrainer-Stigler, Junko Mochizuki and Reinhard Mechler. 2014,Modeling the indirect and fiscal risks from natural disasters: Emphasizing resilience and “building back better”, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR..
Click here to view this GAR paper.

). Clearly, the financial risk to these countries is substantial. In particular, a very significant number of countries would not pass a stress test of their financial capacity to absorb the impact of a 1-in-100-year loss (Figure 5.2).2

(Source:

Williges et al., 2014

Figure 5.2 Countries facing a financing gap for a 1-in-100-year loss event

	102 Part I - Chapter 5 for recovery, reallocating funding and reducing the available future borrowing capacity for development as well, thus hampering future growth. In most higher-income countries, a significant proportion of economic losses are insured. For example, in the July 2013 hailstorms in Germany and France, an estimated US$3.8 billion of the total losses of US$4.8 billion were insured, as were US$1.9 billion of the total losses of US$4.7 billion in the June 2013 floods in Canada (Swiss Re, 2014a). Furthermore, despite their size in absolute terms, these losses are rarely significant compared with annual capital investment in those countries. In contrast, many countries with lower incomes and smaller economies, including least developed countries (LDCs) and small island developing states (SIDS), are severely challenged by rising economic loss. In such countries, most loss is uninsured and governments do not have the financial reserves or access to contingency financing that would allow them to absorb losses, recover and rebuild. For example, while estimates of the total losses from Typhoon Haiyan vary, there is agreement that insured losses are only a small fraction of the overall loss due to low insurance penetration in the region. For example, AIR Worldwide estimates total damage at US$6.5 billion to US$14.5 billion, of which only US$300 million to US$700 million are thought to be insured.1 In fact, a considerable number of countries face resource gaps for events with return periods below 100 years. For example, while Canada and the United States would only face challenges in absorbing the impact from a 1-in-500-year loss, Algeria, Bolivia, Chile, Indonesia, Iran, Madagascar, Mozambique and Pakistan would face difficulties finding the resources to absorb the impact from as small as a 1 in 3-25 year loss (Williges et al., 2014 x Williges, Keith, Stefan Hochrainer-Stigler, Junko Mochizuki and Reinhard Mechler. 2014,Modeling the indirect and fiscal risks from natural disasters: Emphasizing resilience and “building back better”, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.. Click here to view this GAR paper. ). Clearly, the financial risk to these countries is substantial. In particular, a very significant number of countries would not pass a stress test of their financial capacity to absorb the impact of a 1-in-100-year loss (Figure 5.2).2 (Source: Williges et al., 2014 x Williges, Keith, Stefan Hochrainer-Stigler, Junko Mochizuki and Reinhard Mechler. 2014,Modeling the indirect and fiscal risks from natural disasters: Emphasizing resilience and “building back better”, Background Paper prepared for the 2015 Global Assessment Report on Disaster Risk Reduction. Geneva, Switzerland: UNISDR.. Click here to view this GAR paper. .) Figure 5.2 Countries facing a financing gap for a 1-in-100-year loss event	Page 1 Page 10 Page 20 Page 30 Page 40 Page 50 Page 60 Page 70 Page 80 Page 90 Page 92 Page 93 Page 94 Page 95 Page 96 Page 97 Page 98 Page 99 Page 100 Page 101 Page 102 Page 103 ->Page 104 Page 105 Page 106 Page 107 Page 108 Page 109 Page 110 Page 111 Page 112 Page 113 Page 114 Page 115 Page 116 Page 120 Page 130 Page 140 Page 150 Page 160 Page 170 Page 180 Page 190 Page 200 Page 210 Page 220 Page 230 Page 240 Page 250 Page 260 Page 270 Page 280 Page 290 Page 300 Page 310