Climate change a challenge for countries with emerging economic, insurance markets

Climate change is presenting particular challenges to countries with emerging market economies especially as the take-up of insurance in these areas increases, according to an article published by Munich Re.”Climate change presents a particular challenge to fast-growing emerging countries like India”, says Torsten Jeworrek of Munich Re’s board of management. “In conjunction with greater prosperity and the effects of climate change, there is a distinct increase in losses.”The reinsurer notes annual monsoon rainfall in India is becoming increasingly intense. On one day in 2005, for example, Mumbai recorded 944 mm of rain, the highest level of precipitation ever measured on a single day in India. The number of intense precipitation events (at least 100 mm/day) has increased by about a third since 1950, the company notes in its newly published annual review, Topics GeoNatural Catastrophes 2007.At the same time, the rapid development of India’s economy is accompanied by growing prosperity, leading to higher concentrations of values. “This and the strong rise in demand for insurance protection has driven up insured losses in recent years,” Munich Re notes, “Whilst annual losses averaged no more than US$5 million between 1980 and 2004, the figure in 2006 alone exceeded US$400 million.”Globally, Munich Re observes, overall losses amounted to about US$82 billion, of which nearly US$30 billion was carried by the insurance industry. Worldwide, there were 960 natural events in 2007 (compared with 850 in 2006), the highest figure ever recorded since 1974, when Munich Re started its systematic inventory in the NatCatService database.