A new analysis of 36 countries/markets by Swiss Re Institute ranks the Philippines as the most economically exposed among them today, where hazard intensification is likely to occur due to climate change.
The Philippines loses 3% or $12bn of its GDP because of the four weather perils – floods, tropical cyclones, and winter storms – while at the same time being exposed to hazard intensification in the future
The US is second-most exposed. At $97bn (0.38% of GDP) as of today, it experiences the highest economic losses in absolute terms from weather events worldwide and at the same time, a medium probability that hazards will intensify.
In general, countries with sizeable insurance protection gaps and where the establishment of loss mitigation and adaptation measures lags the rate of economic growth, are most financially at risk from hazard intensification. Fast-growing Asian economies like Thailand, China, India, and the Philippines are the most vulnerable according to the report. Indeed, among the 10 countries/markets ranked by Swiss Re Institute as most at risk of higher property damage losses from intensifying weather hazards driven by climate change, seven are in Asia (including Australia).
The 10 countries/markets are:
Based on findings from the Intergovernmental Panel on Climate Change (IPCC), Swiss Re Institute's new report "Changing climates: the heat is (still) on" analyses where hazards are likely to intensify and overlays it with its own estimates of economic losses resulting from the four major weather perils as of today. This provides a view of the possible direct economic implications if weather-related natural catastrophes intensify due to climate change.
Mr. Jérôme Jean Haegeli, Swiss Re's group chief economist, said, "Climate change is leading to more severe weather events, resulting in increasing impact on economies. Therefore, it becomes even more crucial to take adaptation measures. Risk reduction through adaptation fosters insurability. The insurance industry is ready to play an important role by catalyzing investments in adaptation, directly as a long-term investor and indirectly through underwriting climate-supportive projects and sharing risk knowledge. The more accurately climate change risks are priced, the greater the chances that necessary investments will actually be made."
Floods expected to intensify, tropical cyclones main loss driver While flood risk is projected to intensify globally, the main driver of major weather-related economic losses in the US, as well as in east and southeast Asia, are tropical cyclones.
Swiss Re Institute says that the first step towards cutting losses is to reduce the loss potential through adaptation measures. Examples of adaptation actions include enforcing building codes, increasing flood protection, while keeping an eye on settlement in areas prone to natural perils. Ultimately, losses as a share of GDP of each country will depend on future adaptation, loss reduction and prevention.
Source: asiainsurancereview.com