Willis Research Network Puts Insurance at Centre of Global Sustainability
Monte Carlo, September 12, 2010 – The world’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 here today, the Network’s Chairman explained the WRN’s
aim of placing the insurance industry at the epicentre of industrial and social sustainability efforts.
Speaking at the event which coincides with the Monte Carlo Reinsurance Rendez-vous, Rowan Douglas, Chairman of the
WRN and CEO of Global Analytics, said: “From corporate financial stress and bankruptcy on Wall Street,
to poverty and mortality in developing countries, it is increasingly clear each day that our industry’s
and our society’s sustainability is inextricably linked to our ability to avoid and manage extremes.”
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 Chilean earthquake, 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,
- Commonly cited risk drivers include threats imposed by variability in today’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.
“The 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,” 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 “modelled world”, 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.
“Insurance is transitioning from the unfashionable branch of the finance sector, to the ultimate ‘community product,’ enabling
populations to share the costs of extreme events at local and global scales,” said Douglas. “This
is locating insurance at the very heart of the search for sustainable futures.”
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 world’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 – from flooding to hurricanes and earthquakes – 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 WRN has 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.
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.