For the insurance industry catastrophes are an area of close attention. Some natural disasters, like storms and floods, are connected to climate change, particularly in terms of sensitive statistical elements such as frequency and size.
The impact on the insurance business is twofold: on one hand frequent natural disasters lead to an increase in the cost of claims and their reinsurance, on the other they result in a growing demand for protection, with a consequent rise in insurance demand.
To correctly identify and evaluate the risks in this area, we are constantly committed to the short-, mediumand long-term monitoring of climate change. We use catastrophic models to forecast damage and we simulate scenarios that make it possible to quantify the economic and insurance effects of individual events.
We also invest in research and participate in numerous initiatives and working groups on environmental issues connected with climate change, as part of organisations such as Perils AG, of which Generali is one of the founders, Econsense, VfU, Global Compact, etc..
A strategy to face natural disasters
As for Italy, which is particularly vulnerable from a hydrogeological perspective, although it is easy to analyse events from a scientific standpoint, it is much more difficult to carry out a socio-economic analysis of the costs and benefits of prevention activities, mainly because of the absence of an efficient forecasting system. We therefore decided to finance La valutazione economica dei disastri naturali in Italia (The economic assessment of natural disasters in Italy), an interdisciplinary project in partnership with three institutes of the Italian National Research Council, the Milan section of the National Geophysics Institute, and an inter-university centre for research into the economics of resources and the environment.
The initial focus of the project is on earthquakes and landslides and involves four levels of assessment:
- quantification (ex post) of the private and social “cost” of the natural disasters that have taken place in Italy;
- assessment of the economic-social cost risk (ex ante);
- economic assessment of prevention/mitigation policies;
- possible role of insurance policies, in connection with investment in prevention/mitigation, as part of a national strategy for natural disasters.