The Environment in Germany – Panorama

The fear of the world being plagued by natural disasters as a result of climate change is the driving force behind hordes of people taking out extra insurance policies. The fact that the insurance companies are leaving nothing to chance when it comes to underwriting storm damage is impressively illustrated by the “Globe of Natural Hazards” – a new multi-media DVD compiled by the Münchner Rückversicherung or the Munich Re as it is known in English.

The insurance sector clearly shows that it is in fact quite possible to make a profit out of the global climate crisis. Whether it is mudflows, floods, storms or fires – there is almost no risk at all that cannot be underwritten.

Insurance companies however are not welfare organisations. The greater the risk, the higher the premium. This is the basic tenet of a business sector that makes multi-billion dollar profits by insuring against the imponderables of life. In order to ward off possible ruin from having to pay mass compensation for big-loss calamities, direct insurance companies tend to reinsure themselves with a reinsurance company. The global leader in this field is the Münchner Rückversicherungs-Gesellschaft, for short : Münchner Rück, known in English as the Munich Re Group. The fact that this company has managed to make handsome profits despite the rapid increase in natural hazards bears witness to its first-class approach to risk management.

A useful work of reference

Impressive proof of this approach is the company’s recently launched Globus der Naturgefahren (Globe of Natural Hazards) – an offshoot of its world atlas project from 1978. It is a sophisticatedly produced, bilingual, interactive DVD whose aim is to provide business undertakings of all kinds with a hitherto unknown, highly detailed risk analysis.

On opening it, the user is presented with an image of the earth, not unlike the globe that welcomes the user on Google Earth, navigation and handling are also similar. The search function enables the user to zoom in on cities and towns all over the world. A whole range of risks and climate charts related to the selected location can be accessed via the subject panel. There is also a hazard pointer that gives precise information on any local natural hazards. The pertaining disaster catalogue lists all the loss occurrences of the past few centuries. The financial outcome of the events can be accessed by clicking the mouse on the corresponding symbols on the map.

Many elements of the software can be furthermore used as a work of reference. It provides comprehensive information on particularly salient climate phenomena like El Niño or La Niña, on all the world’s mega-cities and on the most commonly used scales and measuring systems for natural phenomena like winds and earthquakes. Links take you into the geo- science section that focuses on individual natural hazards and climatic events like earthquakes, volcanic eruptions, tsunamis, typhoons, winter storms, thunderstorms and regional storms, floods, storm surges, tidal waves and icebergs, as well as what they call mass movements. These are all mostly accompanied by and illustrated with easy-to-read text and lots of photos, videos and animations, as well as by a glossary of all the special terms used.

An objective image of the hazard

It soon becomes clear who the software is targeted at when you read the comments and information on natural hazards that are presented in the typical IT form of FAQ’s (Frequently Asked Questions): “How can earthquakes be insured against?”, “What is the damage potential of a volcanic eruption?”, “What phenomenon often occurs when underwriting flooding?”, “Is subsidence a relevant subject for insurance?”

For the topic of “earthquakes” the answers sound something like this – “For the insurance business any possible accumulation of damage claims in regions that have both high insurance value and risk density that would lead to a company going bankrupt proves to be a major problem. That is why it is all the more important to obtain an objective overview of the risk. Only on the basis of this can the right precautionary measures be introduced.” In this case it is also worth noting that as a rule earthquake insurance usually comes in the form of a supplement to fire insurance or as an integral part of what is called an “Extended Coverage Policy”. The prerequisite for their insurability is the payment of considerable “deductibles”. These are financial contributions that the insured parties have to pay out of their own pockets in the event of loss.

“Risk and opportunity at the same time”

All in all the Globe of Natural Hazards is yet another innovative building block in a comprehensive range of services that was commissioned by the Munich Re and developed by geo-risk researchers as an instrument of external risk management. The NatCat Service2 – the world’s most comprehensive data bank on natural disasters – is also part of this range of services. Since 1974, year for year, it has documented and analysed more than 700 natural hazards. Then there is the online platform NATHAN that has extensive information, categorised by country, on current natural hazards and disasters in history, including a data bank with 800,000 places, towns and conurbations. It is also worth mentioning the Global Location Finder – a so-called geo-tracing service to help track down the exact location of an individual risk. Finally there is the CatLossEstimation Service that is able, for example, to estimate the damage caused by a storm within 48 hours of it happening and predict what financial claims will be made on the direct insurance companies. In the insurance business information is everything. After all what did it say in the chapter on insurance and climate change? “Global warming is both a risk and an opportunity at the same time for the insurance companies. (…) The insurance business will be faced with more and more claims, yet at the same time there are going to be more and more people taking out insurance.”