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Munich Re warns of changing weather risks

Munich Re has warned that changing weather risk patterns are increasing the number of insured losses. 


21 OCTOBER 2014 | BY JUDITH UGWUMADU

The reinsurance company called for risk management adjustments as it noted that the increased frequency and intensity of weather-related losses were very difficult to predict locally.

It said this was partly due to a greater frequency of persistent weather patterns in Europe, involving long periods of dry weather or rain that could lead to droughts or river flooding.

Munich Re noted that the number of weather-related natural catastrophes worldwide that have resulted in losses increased threefold in the period 1980 to 2013.

Ludger Arnoldussen, a member of Munich Re’s Board of Management, said for primary insurers, this means rising income uncertainty and more volatile results.

He said: ‘Changing weather risk patterns necessitate an adjusted perception of risk and bespoke reinsurance protection.

‘We need a better understanding of hazards and potential accumulation risks, and we need to analyse the risk locations in this regard.’

The firm said there was a variety of reinsurance covers designed to protect the balance sheets of primary insurance companies against the uncertainties associated with weather risks and also their customers.