Swiss Re warns of increasing bushfire threat
Bushfire losses have grown in frequency and size in the past decade, according to a Swiss Re report on emerging risks.
The warning comes at the same time as forecasters warn of a developing El Nino climate system, which includes in its effects a hotter and dryer period in southeastern Australia.
Swiss Re says 90% of global insurance losses resulting from bushfires have been incurred since 2002, with the recent class action settlement over the Black Saturday disaster in Victoria showing how severe losses can be.
“From a (re)insurance perspective, this implies [bushfires] have a high potential to be underestimated with respect to frequency and severity in the coming years,” the reinsurer says.
There may be a “significant impact” on casualty cover if fires are started or exacerbated through negligence, such as insufficient maintenance of power lines, as was alleged in the $494 million Black Saturday case.
Lloyd’s data shows fire accounted for $US7.9 billion ($10 billion) of insured losses in the US from 2002-11, up from $US1.7 billion ($2.15 billion) in the previous decade.
Bushfire losses largely comprise casualty claims (52% of losses), property (40%) and marine (9%).
Swiss Re’s SONAR report rates fire as a medium global risk over the next three years.
Three threats are identified as high risk for the next three years: super natural catastrophes, the “great monetary experiment” and “de-globalisation”.
In the longer term, the emerging risk with the highest potential impact is data and the internet.
The report says regulations on data availability, usability and privacy may make claims-handling more difficult. New entrants such as large technology companies may consider entering the insurance market to capitalise on their enormous data stores.