EMERGING NATIONS OVERLY IMPACTED BY CATASTROPHES, SAYS MUNICH RE

Emerging countries are disproportionately impacted by natural catastrophe losses, and insuring against such losses makes particular economic sense, according to a scientific study conducted by the University of Würzburg on the basis of loss data from Munich Re’s NatCatSERVICE database. Munich Re noted that a survey by its economic research department found that in emerging countries direct losses from natural catastrophes total an average of approximately 2.9% of the gross domestic product each year, compare with 1.3% in developing countries and 0.8% in industrialized countries. Munich Re chief economist Michael Menhart said that “Whilst emerging countries already have a relatively substantial capital base, they often lack the resources or necessary effectiveness in their administration to protect themselves better against the consequences of natural catastrophes". he also noted that urbanization of coastal regions in Asia increased the potential damage from cyclones. The Würzburg study – supported by Munich Re Economic Research, found that in emerging countries, apart from insurance limiting losses, it also had an indirect loss-minimizing effect because they represented an incentive to take preventative measures.