Underinsurance costs the States very dearly

Magazine Issue:

2013, a year of transition [3]

Magazine date:

Jan 2013

A survey conducted by the Lloyd’s has found that the gap between insured losses and the economic cost of a natural catastrophe amounts to 168 billion USD a year on average. Out of the 538 billion USD of economic damages reported worldwide, only 21% are insured.

This gap can be defined as underinsurance level. In 2011, a year particularly affected by this kind of event, this gap amounted to 254 billion USD. Covering a sample of 42 countries, the survey has pinpointed the vulnerability of 17 countries, especially the developing ones. More surprisingly, some developed countries, such as Japan, stand on the list of the vulnerable ones. During the March 2011 events that occurred in this country, only 35 billion USD were covered by insurance out of a total of 210 billion USD. Because of the inadequate coverage by insurers, the State found itself compelled to offset the difference.