The insurance industry plays a pivotal role in integrating new tools, technology and solutions to protect populations and assets against growing concerns about natural disasters and, in the process, helps ensure a sustainable future. So says Rowan Douglas, chief executive officer of Global Analytics at Willis Group Holdings, during a speech at the World Bank’s Bi-Annual Understanding Risk Conference in Cape Town, South Africa.

Douglas said that the ongoing financial crisis and worsening economic environment may reduce the ability of countries to cope with the costs of natural catastrophes and heighten the need for countries to incorporate better preparedness and financial risk transfer mechanisms.

“The insurance sector is at the very heart of this process, integrating new knowledge into decision making, setting policy standards and enabling populations to share risks at local and global scales, he said.

“That is the role that the insurance industry has played for centuries and the need has never been greater, some may say we are entering a new age of insurance in the face a growing risks and uncertainties. Harnessing the insurance mechanism and enabling us all to gain some financial security and resilience against natural disasters is critical for enabling investment and providing a platform for sustainable growth.”

Speaking to an audience of 500 business and policy leaders from 85 countries, Douglas highlighted how we are all united by the challenges of confronting natural disasters. “The events of 2011 showed that even the most prepared countries within the developed world are vulnerable to natural disaster, while these events impacted us all through our supply chains and dependencies on key components and commodities."

Meanwhile the growing importance of natural disaster management is evident within the agenda of national and international institutions like the G20, European Union and United Nations.

“It is clear that we are entering a new era of knowledge about extremes, natural hazards and the vulnerabilities of the built environment and exposed populations,” continued Douglas.

“Advances in mapping are revolutionising our ability to access, fuse and deploy data from disparate sources to manage risk and provide better services to customers. These mapping tools and technologies are at the heart of our competitive advantage at Willis and an ongoing priority for the company, together with our development partners in science and industry.

“Data is now being integrated from major satellite platforms and high resolution climate models, powered by supercomputers, together with input from millions of other contributors via crowd sourcing and social networks.

“This fusion of macro and micro sources combined with spatial referencing and mapping is helping the insurance industry to become more resilient.”

He highlighted in particular a new Global Earthquake Model called OpenQuake, sponsored by WRN, which will enable countries, companies and communities to understand their earthquake risk more clearly and make sensible choices on how to manage it.

Douglas pointed out that the insurance market has continued to function normally despite the second largest year of insured losses in its history. “This is due in large measure to the role of improved modelling in the last twenty years coupled with an emerging convention that an insurance policy (and the company that backs it) should be able to tolerate at least the maximum probable loss that could be expected over a 1 in 200 year return period.

“There is still much to do, much to learn and much to improve, but the industry is making enormous strides in this area of innovation and it is being recognised and respected by our sector's customers and stakeholders.”

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