Large-scale catastrophe risks, such as natural hazards, cyber attacks and infectious disease outbreaks, can lead to devastating financial consequences for individuals, households and businesses impacted by the resulting damage and disruption. Insurance markets play a critical role in providing financial protection against these risks, although evolving climate and environmental risks, fast-moving technological changes, and increasing geopolitical tensions and social unrest are testing the ability of private insurance markets to achieve broad coverage.
The new OECD report Financial Protection Against Catastrophic Risks: Floods, Fires and Other Major Risks explores the role of governments, insurance regulators and the insurance sector in strengthening insurance market capacity and improving financial resilience. It identifies policy options for assessing the need for government-supported financial protection, examines the implications of increasing wildfire losses and how to increase coverage of that risk, and looks at how the design of flood risk insurance programmes can support broad coverage, mitigate fiscal risks and contribute to risk reduction.
