Flood exposure in Africa

Source: Sigma SwissRe

Flood exposure in AfricaFrom global to local challenges

Caspar HoneggerHead Flood, Swiss Re

Title : Black Gill Sans MT FontSubtitle

• Text

Agenda

• Global loss trends and the impact of climate change• Natural catastrophes - focus on eastern and southern

Africa• Flood insurance - challenges and solutions• CatNet - global natural peril assessement tool

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Loss trends and effects of climate change

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Insured natural catastrophe losseshave been increasing

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Earthquake/tsunami Weather-related catastrophes Man-made disasters

insured claims in USD bn, at 2013 prices

Hurricane Andrew

HurricanesKatrina, Rita, Wilma

WTC

HurricaneSandy

Japan, NZ EQ,Thailand flood

Winter Storm Lothar

Hurricanes Ivan, Charley, Frances

HurricanesIke, Gustav

Flood losses are on the rise

Insured flood losses increased by 12% per year (7% when adjusted for inflation) worldwide since 1970

Global GDP growth for that period was less than 4% per year

Source: Sigma Database

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Increasing values• Growing population and economic activity lead to

increasing values• Increasing vulnerability of insured values

Exposed Areas• Settlement s in high risk areas such as flood plains and

coastal areas• Increasing value concentration in flood prone areas

Increased Insurance Penetration• Increasing wealth of population leads to more people

buying insurance

Climate Change• Hazard cycles and trends• natural & man-made climate change

Reasons for increasing flood losses

Global mean temperatures will continue to rise by between 2°C and 4.5°C by 2100

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What we know…

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We have a good idea of the energy budget of the Earth, i.e. incoming energy (mainly solar radiation), outgoing energy (radiation off the Earth’s surface and the atmosphere) and reservoirs (oceans, soil, atmosphere)

Climate models can reproduce the average changes in the system that are induced by changes in the energy budget (global temperature, etc.) rather well.

We know:If we turn up the heat, the water will start to boil.

We do not know:Where exactly the bubbles will be at a certain time…

??? ??

…where the uncertainty lies…

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Climate models are less reliable when it comes to the distribution of energy within the climate system.

we have more problems to project how regional climates will change and what will happen to extreme events.

…specifically on extremes

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Extremes are very rare by definition. Therefore we need very long-term

observations to detect significant changes in extremes.

Thus, observed changes are only detected for more frequent “extremes” (like warm or cold days, heat waves, heavy precipitation) or when aggregated over the globe.

In order to statistically detect changes in very extreme events, the change must be huge, and it will most probably be too late to react.

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Natural catastrophes:How does Eastern and Southern Africa compare?

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Cities most at risk from river flood worldwideby number of people affected

Source: Mind the Risk, Swiss Re publication 2013

Top 3: Pearl River Delta (12.0m), Shanghai (11.7m), Kolkata (10.5m) Top 3 Africa: Cairo (5.5m), Khartoum (2.5m), Kinshasa (1.8m)Top OEASI: Nairobi (0.6m)

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Source: Mind the Risk, Swiss Re publication 2013

Cities most at risk from cyclones worldwideby number of people affected

Top 3: Pearl River Delta (17.2m), Tokyo-Yokohama (14.1m), Manila (12.6m) Top 2 Africa: Antananarivo (0.1m), Maputo(0.1m)Top OEASI: Antananarivo, Maputo (0.1m)

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Source: Mind the Risk, Swiss Re publication 2013

Cities most at risk from earthquakes worldwideby number of people affected

Top 3: Tokyo (29.4m), Jakarta (17.7m) and Manila (16.8m)Top 3 Africa: Cairo (17.6m), Tunis (0.4m) and Algier (0.3m)Top OEASI: Kampala (0.05m)

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Mind the riskA global ranking of cities under threat from natural disasters

http://www.swissre.com/rethinking/climate_and_natural_disaster_risk/Mind_the_risk.html

Africa and OEASI: Economic losses and victims since 2000

Afr

ica

OEA

SI C

ou

ntr

ies

Flood is the dominant natural hazard in the OEASI region

More than a third of Africa's flood losses happened in the OEASI countries

More than a half of Africa’s storm losses occurred in OEASI countries

Source: Sigma SwissReg

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Source: Dartmouth Flood Observatory, 2015

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Flood Insurance:Challenges and solutions

Key flood insurance challenge

The majority of people live in low flood risk zonesA small number lives in high risk zones

People most at risk are most likely to buy a flood productWhich results in a adverse selected insurance portfolio

Solutions to adverse selection

Optional flood

products

risk based pricing

market penetration often limited

Examples: Germany,

China, Brazil

Mandatory flood

products

mandatory element solves adverse selection

needs government

and/or industry support

Examples:UK,

Switzerland, France

Risk based pricing for flood

• Hazard levels, as shown by flood zones, are the key determinant for flood risk

• Additional risk factors are protection measures, vertical value distribution and occupancies

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Flood - an underestimated riskInspect, inform, insure

http://media.swissre.com/documents/Flood.pdf

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CatNet: Swiss Re tool for worldwide natural peril assessement

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What is CatNet®?• Swiss Re's online natural hazard information and

mapping system• Professional overview and assessment of natural

hazard exposure worldwide • Preparation of local, regional and cross-regional risk

profiles

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• Swiss Re Global Flood Zones

• Official flood zones (e.g. USA, Germany)

• Global storm surge layer• Seismic Risk (update in

2015)• Earthquake Epicentres• Tropical Cyclone Tracks• Storm, Hail and Tornado

risk • Recent Events, Global

alerts, weather and climate information

• Population• sigma World Insurance &

sigma loss information• CRESTA• and more…!

CatNet datasets

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Swiss Re Global Flood ZonesDar es Salaam, Tanzania

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• Import your location data to illustrate risk exposures combined with natural hazard data

• Risk profiles for your locations

• Footprints of major catastrophes

• Import of Excel and KML• Editing and Export of data• Risk look-ups• Single Risk Assessment

Dashboard

CatNet® benefits & functionality

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For more details

go to our w

ebsite or c

ontact

your Swiss

Re underwriter

www.swissre.com/catnet

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Conclusions

Title : Black Gill Sans MT FontSubtitle

• Text• Flood is the dominant natural hazard in eastern and southern Africa

• Climate change will likely increase the frequency and severity of heavy precipitations events

• Flood is a growth opportunity for insurers and adds value to insureds, if necessary preconditions are met.

• The Swiss Re Global Flood Risk ZonesTM accessed via CatNet are widely used in the insurance industry and have helped to improve flood risk underwriting.

Flood insurance is a hot topic!

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Questions?

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