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Global disasters are continuously claiming lives in an alarming number and speed. We now know that these tragedies do not follow weather climates or the demography of the place. Hurricanes after tsunamis after earthquakes no longer choose the place and the season. They just struck on the most unexpected time. Hails are already happening in tropical countries when humidity is dominant and 20° is already considered freezing. Moreover, it happens in the middle of summer.
Typical insurances cover the basic risk associated in a home but floods and other calamities are not included. The higher the risk your home is near flooded areas, the lesser the chance of low premium. Large insurance and reinsurance companies like Lloyds and Fitch have already been alarmed on the worsening calamity change. The losses are increasing every year and claims have been higher in number. Moreover, fraudsters even take advantage of the worsening situation to create their scheme and pose fake claims.
Axis Capital, with a group of insurance and reinsurance companies in Bermuda, Singapore, Australia, the United Kingdom and United States, also state the same concern. Global calamities have affected their clients from all over the world and it gets worse since some of their offices are based on disaster prone areas. Other companies voice out their frustrations, some even close their businesses due to financial bankruptcy. Global economy has greatly been affected on the loss of both lives and businesses.
According to a review of Swiss Re, the second largest reinsurance provider, the global insurance industry covered $21 billion on the last quarter of 2014. The total economic cost of disasters in the whole year of 2014 was $44, 000 with the deaths of 4, 700 people.
By providing indemnification clauses, victims of calamities get benefits taken from the payments of those not affected, causing much dispute and complaints from different sectors. But funds had run out and financial cycle is the only solution these providers can think of.
It gets worse for developing countries and cities which has low number of insured citizens. With the minimum support from the government and no concrete laws supporting the cause, insurance cannot be imposed.
Since the effects and consequences of uninsurance are already realized, many cities are slowly implementing rules on their citizens. Jakarta, Indonesia and Kuala Lumpur, Malaysia are the leading ones to enforce even basic insurance to their people.
Calamities still happen. We can only pray and ask that we can be well prepared to face them.
