NJ Future Sandy One Year Later Risk Linkin Oct 29 2013

Rethinking Risk in a

Changing Climate

Megan E. Linkin, Ph.D., CCM

Natural Hazards Expert, Swiss Re Global Partnerships

Sandy: One Year Later

Monmouth University, October 29, 2013

M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013 2

Economic and Insured Losses1980 - 2012

Source: Swiss Re Economic Research and Consulting

Increasing trend in magnitude of annual losses Larger proportion of losses are uninsured


Planning for Climate Change using a Risk Management Framework

Modeling expertise

The Economics of Climate Adaptation Methodology

Innovative Alternative Risk Transfer Solutions

Education and consultation services



Modeling expertise




M. Linkin, Swiss Re | Sandy: One Year Later | Monmouth Univ., Oct. 29, 2013

Swiss Re's proprietary model considers four elements that determine a Cat loss

What exactly is covered ... where... and how?

Hazard VulnerabilityValue

distributionCover

conditions

Sums insured Cover limits Deductibles Exclusions etc.

ExampleHurricane “Charley”Aug 2004

How often / how strong?

How well built and protected?



Modeling expertise





December 2012: Mayor Michael Bloomberg launches the Special Initiative on Rebuilding and Resilience (SIRR) to develop a comprehensive plan to protect the city of New York from future storms.

Swiss Re and McKinsey have a proven track record in assessing damage, evaluating natural hazard risk and identifying and quantifying the costs and benefits of adaptation measures in more than 20 countries and regions around the world dating back to 2008.

Using information about infrastructure, building stock and mitigation and adaptation measures from the City, Swiss Re and McKinsey performed economic loss potential analysis for current and future climate scenarios with and without adaptation/mitigation strategies.

The Economics of Climate AdaptationCase Study: New York City

Source: The City of New York



Modeling expertise





Topic Traditional Insurance

Parametric Solutions

Use of Proceeds Intended to cover loss sustained

Used at buyers discretion

Speed of Payment Subject to loss adjustment (can be slow)

Rapid: 2 – 6 weeks

Loss Adjustment / Administrative Process

Yes - buyer may need own claims adjusters

No – little claims administration needed

Transparency Loss settlement is complex to explain

Parametric triggers easier to explain

Pricing Flexibility Limited modifications Structure can be adjusted to price

Changes in Exposure Annual adjustments No adjustment needed

Traditional vs. Parametric –Benefits to buyer


How do Parametric solutions work:MultiCat Mexico hurricane example

Trigger: Hurricane of 920 mb or

lower through box = payment



Modeling expertise





Founding sponsor of Climate Week NYC

Mind the Risk report

– Calculated affected population and lost economic productivity for 616 metropolitan areas globally.

– NYC/Newark metro region: Ranked #1 in potentially affected storm surge population in US

100 Resilient Cities Challenge

– Support at least 100 cities in the next three years to appoint Chief Resilience Officers (CRO), create resilience strategies, and establish a CRO support network to share information and best practices.

Knowledge SharingIncreasing Climate Resiliency


Web-based hazard mapping tool

Real time information regarding impending and on-going events.

Post event footprints.

Swiss Re Global Flood Zones.

Expertise for our clientsCatNet

Source: ©GfK GeoMarketing Map Edition World, Swiss Re GEOservices


Managing climate change and its impacts will require innovative, multi-disciplinary approaches.

Insurance is a vital component when considering a holistic, comprehensive approach to climate change related disaster risk financing.

Understanding climate change is of paramount importance to the insurance industry.

Academia, the public sector and private citizens can and should tap into the wealth of risk management knowledge provided by the insurance industry.

Concluding Thoughts

Thank you


Legal notice

©2013 Swiss Re. All rights reserved. You are not permitted to create any modifications or derivatives of this presentation or to use it for commercial or other public purposes without the prior written permission of Swiss Re.

Although all the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial and/or consequential loss relating to this presentation.

NJ Future Sandy One Year Later Risk Linkin Oct 29 2013

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