Cities around the world need to overhaul their risk management approach to make infrastructure more resilient to catastrophes - and insurers and brokers have a significant part in this process, new research from Lloyd’s reveals.
According to its latest report, city officials, investors and insurance companies need to work together in improving cities’ infrastructure resilience to address risk and uncertainty.
“Brokers have an important role to play in this process,” the report also says. “They can help insureds to better understand the risks they are facing, and ensure good quality information is passed on to the underwriters so they can write better insurance policies.”
Lloyd’s says the insurance sector could take collective action to work with stakeholders and build greater city resilience in nine areas:
- Improving data collection;
- Using this new data to quantify the risk and help inform stakeholder decision-making;
- Establishing metrics to enable the development of indices and models to assess resilience;
- Finding ways to incentivise investment by making resilience assessments available;
- Incentivising policyholders to take risk mitigation measures through risk-based pricing;
- Developing collaborative models and tools that provide a transparent, comprehensive and accessible approach to analysing and pricing risk;
- Encouraging the creation of indices that can be used by insurers to incorporate levels of resilience into the underwriting process;
- Creating shared understanding of how the components and stakeholders of cities interact and what the key areas and concerns are for each stakeholder; and
- Considering resilience services which draw on facilities management, disaster recovery, build and operate contracts and insurance.
Lloyd’s CFO John Parry laments that cities have become more exposed to a greater diversity of risks as global population increases.
“The principles set out in this report represent a new approach that could substantially improve infrastructure resilience around the world,” he says.
Related stories:
Lloyd’s warns industry of stranded assets on global scale
