LONDON (Reuters) - Some of the world’s fastest-growing economies do not buy enough insurance to cope with the natural disaster risks they face, imposing a heavy burden on taxpayers, the Lloyd’s of London insurance market said on Tuesday.
Seventeen high-growth economies have a collective $168 billion (104.8 billion pounds) deficit in insurance spending relative to the average for well-insured countries in the same income bracket, according to a study published Tuesday by Lloyd’s and the Centre for Economics and Business Research.
The insurance shortfall means most of the cost of natural catastrophes in the countries affected falls disproportionately on the public purse, holding back recovery.
“The insurance gap has a huge and lasting impact on the ability of businesses, governments and people to recover from the earthquakes, hurricanes, flooding and forest fires that affect us every year,” CEBR Chief Executive Douglas McWilliams said.
The cost of natural disasters has increased by $870 billion in real terms since 1980 as economic growth across the world increases the value of buildings and other assets vulnerable to hurricanes or flooding, the report estimates.
Insurers absorbed $107 billion in natural catastrophe claims in 2011, making it the industry’s second costliest year for disasters on record.
The 17 underinsured countries include China, Brazil, Nigeria, Thailand, Vietnam and Bangladesh.
Lloyd‘s, which traces its origins back 324 years to a London coffee house where merchants insured ships, is made up of 88 competing syndicates that offer insurance and reinsurance worldwide.
Reporting by Myles Neligan; Editing by Helen Massy-Beresford