…There are significant variations within
Director of the Hungarian Environmental Management Studies Centre (MAKK) Gábor Ungvari, continued to move the focus away from insurance to prevention, clearly believing the long-term solution lies in effective water management. In any event, some insurers are already refusing to insure houses built on areas subject to flooding, and poor rural communities often cannot afford to insure in any case.
Of course there are some natural disasters, such as earthquakes and major storms, that are so unlikely that it would be uneconomical to build defences against them. The insurance companies are ready with a new batch of products to deal with such risk. The market in catastrophe bonds (“cat bonds”), offered as a substitute to reinsurance, has been growing steadily since the late 1990s. Purchasers of these bonds collect dividends – channelled from the premium of the insurance policyholder – and are in effect betting against a calamity occurring.
Karim Tamir of Allianz Climate Solutions GmbH said his parent company, the German insurance giant Allianz, issued USD 150 million in “London Flood Bonds” in April this year, so people can bet against the world’s largest financial centre being washed away by a swollen