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Willis Research Network Puts Insurance at Centre of Global Sustainability

^{Published on 2010-09-15 12:25:34 - Market Wire}
 

MONTE CARLO--([ BUSINESS WIRE ])--The worlda™s largest collaboration between academia, industry and government, the Willis Research Network (WRN), part of Willis Group Holdings (NYSE: WSH), the global insurance broker, is marshalling the expertise of its international membership base to assess the physical, strategic, operational, and financial risks posed by extreme events. At a press briefing in Monte Carlo on Sunday, the Networka™s Chairman explained the WRNa™s aim of placing the insurance industry at the epicentre of industrial and social sustainability efforts.

"From corporate financial stress and bankruptcy on Wall Street,to poverty and mortality in developing countries, it is increasingly clear each day that our industrya™s and our societya™s sustainability is inextricably linked to our ability to avoid and manage extremes."

Speaking at the event which coincides with this weeka™s Monte Carlo Reinsurance Rendez-vous, Rowan Douglas, Chairman of the WRN and CEO of Global Analytics, said: aFrom corporate financial stress and bankruptcy on Wall Street,to poverty and mortality in developing countries, it is increasingly clear each day that our industrya™s and our societya™s sustainability is inextricably linked to our ability to avoid and manage extremes.a

The first six months of 2010 saw insured catastrophe losses exceed $20 billion--equivalent to the total losses incurred during the whole of 2009. Standard & Poor's, the rating agency, estimates that more than half of the reinsurance sector's annual catastrophe budget had already been eroded before the onset of the U.S. hurricane season. Munich Re puts insured losses at $22 billion in the wake of the Chileanearthquake, the U.S. winter storms, Windstorm Xynthia in Europe, hail in and around Melbourne, and widespread flooding in several territories. According to S&P, this represents the highest level of first-half losses seen during the last decade, and more than double the average.

At the press briefing, the WRN highlighted the following interesting statistics:

• In the past three decades, direct global economic losses for all types of natural catastrophes have averaged US$90 billion per year, with 78% of those natural catastrophes being weather related.
• 85% of deaths associated with all natural catastrophes over that timescale have occurred in developing countries (Munich Re, 2010).
• Commonly cited risk drivers include threats imposed by variability in todaya™s climate, development pathways increasing human vulnerability including population growth and urban concentration, natural resource depletion, low quality housing, and additional potentially devastating, uncertain risks from climate change that may worsen weather-related catastrophes.

In a world where systemic risk has led to the unravelling of our financial system, the reinsurance industry, backed by cutting-edge science, is in a strong position to help industry and governments share the burden and costs of extreme events.

aThe obligations imposed by regulators to ensure our industry has sufficient capital to withstand the maximum probable losses expected once every 200 years are only set to toughen with the introduction of laws like Solvency II, the creation of an Office of National Insurance within the U.S. Treasury, and a reshuffling of financial regulation in Britain. No other branch of the finance industry has to manage to such extreme thresholds of sustainability as part of its everyday operations as ours, so it makes perfect sense to position insurers at the forefront of global sustainability,a said Douglas.

Increasingly, the methods and principles used to evaluate and calculate the risks of natural catastrophes are being employed to understand our exposure to manmade disasters, the meltdown of financial markets, and other systemic risks. All these analyses are now being conducted in an increasingly unified amodelled worlda, with the benefits moving far beyond the insurance industry and people in rich nations, to helping governments, aid agencies, and local communities advance sustainable development and alleviate poverty in developing nations.

aInsurance is transitioning from the unfashionable branch of the finance sector, to the ultimate acommunity product,a™ enabling populations to share the costs of extreme events at local and global scales,a said Douglas. aThis is locating insurance at the very heart of the search for sustainable futures.a

About the Willis Research Network:

The Willis Research Network (WRN), funded and supported by Willis Re, the reinsurance arm of Willis Group Holdings (NYSE: WSH), the global insurance broker, is the worlda™s largest collaboration between academia and the insurance industry.The research supported by the WRN is focused on evaluating the frequency, severity and impact of major catastrophes a" from flooding to hurricanes and earthquakes a"with the aim of helping society at local and global levels manage these risks and share the costs of these events via public and private sector approaches. To achieve this mission,the WRNhas teamed up with more than 40 leading universities and scientific institutions across a full range of disciplines, from atmospheric science and climate statistics, to geography, hydrology and seismology, to assess the impacts on the environment via engineering, exposure analysis and Geographic Information Systems. More information can be found at [ www.willisresearchnetwork.com ].

About Willis:

Willis Group Holdings plc is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. Willis has more than 400 offices in nearly 120 countries, with a global team of approximately 17,000 employees serving clients in virtually every part of the world. Additional information on Willis may be found at [ www.willis.com ].