Learning is more than half the battle – climate head’s perspective on the insurance gap


Learning is more than half the battle – climate head’s perspective on the insurance gap.



  • Ernst Rauch, Chief Climate and Geo Scientist at Munich Re discusses the challenges and strategies for addressing the insurance protection gap in the face of climate change.
  • Rauch emphasizes the importance of data analysis and public-private partnerships in reducing vulnerability and increasing resilience.

Unpredictability of Nat Cat Losses:

  • Rauch highlights Munich Re’s data analysis of natural catastrophes (nat cat) worldwide since the 1970s.
  • Half-year figures do not reliably predict year-end insured losses due to the unpredictability of nat cat events.
  • Insured losses in Asia vary significantly based on event types, regions, and insurance penetration.

Vulnerability Across Asia:

  • Asia is vulnerable to various natural disasters, including geophysical and weather-related events.
  • Coastal regions are often more vulnerable due to higher population density and property values.
  • Some Asian countries, such as Japan and parts of China, have earthquake exposure.

Protection Gap in Asia:

  • The protection gap for natural catastrophes in Asia has averaged 92% over the last 40 years, indicating a lack of insurance coverage.
  • While there has been moderate improvement in closing the gap in recent years, substantial work remains.

Government Regulation and Public-Private Partnerships:

  • Rauch emphasizes the role of regulation and public-private partnerships in closing the protection gap.
  • Mandatory insurance programs, like those for earthquakes or flooding, can help reduce the consequences of damage.
  • Examples include the Toka Tū Ake EQC in New Zealand, the US National Flood Insurance Program, and the Turkish Catastrophe Insurance Pool (TCIP).

Role of AI:

  • Rauch believes AI is not a significant driver in closing the protection gap, as the challenge primarily lies on the demand side.
  • While catastrophe models may benefit from AI, information, education, and improved resilience are vital to closing the gap.
  • Increasing risk awareness, teaching risk awareness in schools, and transparently sharing information on natural hazards is essential.

Building Resilience:

  • Strengthening resilience and reducing vulnerability is crucial for addressing the changing risk landscape.
  • Resilience efforts include improving building codes, land use planning, and public risk awareness.
  • Reducing vulnerability can lead to more stable and affordable insurance premium rates.


  • Addressing the protection gap requires a multi-faceted approach, including public-private partnerships, regulation, education, and resilience-building efforts.
  • Climate change is a significant loss driver, underscoring the need for proactive risk mitigation and protection measures.

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