The Munch Re’s report for 2016 has indicated that countries across the world suffered natural disasters to the tune of $175billion (N54.3trillion) in 2016. Out of this figure, only $50billion (N16trillion) was covered by insurance industry.
The details show that earthquake on Japan’s southern Kyushu Island caused $31billion (N9.6 trillion) worth of damage, with $6billion (N1.96 trillion) of the costs covered by insurance. Floods in China in June and July caused $20bn (N6.2 trillion) in damages with only $300 million (N93 billion) insured.
The third-costliest disaster was Hurricane Matthew, which hit the Caribbean and the eastern USA in October. It incurred losses totalling $10.2 billion (N3.16 trillion), of which $3.8 billion (N1.18 trillion) was covered by insurance.
Insurance claims from natural disasters such as storms and earthquakes fell to $27 billion (N8.37 trillion) in 2015 as the overall cost of natural catastrophes dropped to its lowest level since 2009.
By 2020, the ARC aims to reach 30 countries with nearly $1.5 billion of coverage against drought, flood and cyclones.
The ARC also aims to provide the infrastructure to ensure these risk management investments are sustainable and resilient to future climate shifts. This will be achieved using climate adaptation financing, the extreme climate facility, which intends to issue climate change catastrophe bonds this 2017.
Against the increasing incidences of natural disaster and the impact on insurance sector worldwide, the Nigerian insurance industry is yet to develop policies to cover such risks.
Director General of National Emergency Management Agency (MEMA) Muhammad Sani-Sidi said at a multi-stakeholders workshop last week in Abuja that it was important for Nigeria to kick start its disaster risk financing, insurance policy and strategy for weather phenomenon such as drought and flood.
“Africa Risk Capacity is aiming to reach a total of 30 countries with corresponding insurance coverage of USD 1.5 to 2 billion by 2020 for drought, river flood and cyclones. This coverage will indirectly be of benefit to over 150 million persons of which Nigeria is expected to be beneficiary,” he said.
The Director-General urged insurance companies to rise up to the challenges of advocating for insurance covers on farmlands houses and critical infrastructures, as it is practically impossible for the government to compensate everyone.
Chairman of the Nigerian Insurers Association (NIA), Mr Eddie Efekoha, agreed to the fact that insurers and reinsurers play a vital role in rehabilitating communities that have been struck by catastrophes.
“The environmental changes are having a lot impact on the insurance industry in terms of claims elsewhere and the Nigerian industry must be proactive before we are taken unawares,” he said.