Emerging Risks for insurers due to Climate Changes in Bangladesh

Emerging risks are risks which may develop or which already exist that are difficult to quantify and may have a high loss potential. Further, emerging risks are marked by a high degree of uncertainty; even basic information, which would help adequately assess the frequency and severity of a given risk, is often lacking.  It includes climate change, asbestos liabilities , genetic engineering and nanotechnology.

Climate change  impacts:

Bangladesh is one of the largest deltas in the world which is highly vulnerable to Natural Disasters because of its Geographical location. In the 2017 edition of Germanwatch’s Climate Risk Index, Bangladesh was judged to be the sixth hardest hit by climate calamities of 180 nations during the period 1996-2015.

Bangladesh experiences different types of Natural Disasters almost every year because of the Global Warming as well as Climate Change impacts. These are

  • Floods/Flash Floods ( Almost 80% of the total area of the country is prone to flooding)
  • Cyclone and Storm (South and south-eastern parts of the country were hit by Tropical  Cyclone during the last few years)
  • Salinity Intrusion (almost the whole Coastal Belt along the Bay of Bengal is experiencing  salinity problem)
  • Extreme Temperature and Drought (North and North-Western regions of the country are suffering because of the Extreme Temperature problem)

Key Natural Hazard Exposures and Risk:

Insurance Solutions:

Natural catastrophe events like earthquakes, storms and floods cannot be prevented, but the potential risks and their impacts can be understood. An appropriate strategy can be put in place to address the risks and reduce the impacts of such events and any resulting business interruption.

The process of the mitigation of risks:

  • Identify  their exposures – be they earthquake, wind or flood
  • Evaluate the potential impact of those exposures
  • Implement cost-effective mitigation strategies at the local size and at the corporate level
  • Develop catastrophe specific plans.

Earthquake Exposure Evaluation:

  • Design and review earthquake protection for fire safety system
  • Evaluate flammable liquid and gas system against earthquake hazard and provide a solution
  • Evaluate site for content shake damage including proper anchorage of electrical panels and storage racks.

Wind Exposure Evaluation:

  • Detailed evaluation of roof systems and wall cladding including doors and windows.
  • Review of roof drainage designs
  • Review of skylight fixing on roofs
  • Review of security of roof-mounted equipment
  • Site visit to review roof installations as per design and review of workmanship.

Flood Exposure Evaluations – per site

  • Generate flood maps (using Munich Re CatNet flood model)
  • Develop detailed flood study
  • Recommended appropriate, cost-effective and practical risk improvement measures to help mitigate property, operational and life safety risks
  • Review flood emergency response plan

References:

  • News@Vews- published by Marsh & McLennan, India
  • Emerging Risks Management for Insurers- Willis Re
  • Climate Change & its impacts on Bangladesh – NCDO
  • Sigma – Swiss Re Institute 

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