Over a billion people and US$30 billion in economic activity are exposed to volcanic risks globally, according to data from leading reinsurance company Swiss Re.
Swiss Re announced last week the release of its global volcano model that calculates the risks presented by over 500 active volcanoes all over the world. The model will help insurers quantify the risks associated with areas subject to volcanic activity and to calculate expected losses in case of eruptions.
Some of the cities that are most exposed to risk are: Tokyo, Naples, Manila, Managua and Jakarta, Swiss Re said.
Swiss Re added that Iceland is the only country that has compulsory volcano insurance. In other countries, losses from volcanic eruptions are mostly uninsured, creating a huge protection gap. The ability to precisely assess and price volcanic risks is crucial to the development of better insurance solutions to meet customers’ needs, said the reinsurer.
“As global urbanization gathers pace, the protection gap for volcanic hazards widens,” Jayne Plunkett, Swiss Re CEO for reinsurance in Asia, said in the report. “But economic disruption and large-scale economic losses for people and businesses locally are only one part of the picture. For example, in the case of any large-scale eruption, supply chains would be affected all around the world, causing both economic and insured losses.”
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