Natural Disasters and International Insurance Market Stability

The frequency and intensity of natural catastrophic events are increasing worldwide also due to climate change. Their effects are not homogeneous among countries: although the costliest disasters generally occur in developed countries, low- and middle-income countries have experienced the largest costs for damage recovery (direct losses), in terms of annual average direct losses compared to GDP and in terms of number of victims per year. At the global level the gap between the different countries and the absence of an integrated insurance market has a negative impact on the risk diversification, the instability of the world insurance market and the economic growth. There are some remedies to these problems. In particular the developing countries are able to reduce their vulnerability, by facilitating disaster prevention risk management, increasing investments in prevention and preparedness, developing risk financing and catastrophe insurance programs. Among other remedies, the developed countries should increase risk financing and catastrophe insurance programs, also looking at the developed countries and with the involvement of international donor community, the World Bank and the other international financial institutions.