May 15, Government & Industry Affairs

Transcription

1 Community Resilience to Natural Disasters and the Role of the Insurance Industry The Association of Insurance Compliance Professionals (AICP) Great Lakes Chapter May 15, 2015 Government & Industry Affairs

2 About Zurich Zurich Insurance Group is a leading multi-line insurance provider with a global network of insurance subsidiaries and offices. Founded in 1872, Zurich is headquartered in Zurich, Switzerland with approximately 55,000 people serving customers in more than 170 countries and territories. In 1912, Zurich entered the U.S. (via Chicago) and quickly became a leading commercial property and casualty insurance carrier. We are very proud of our more than 100 years of doing business in the United States, and currently employ about 9,000 people in North America - including about 3,000 in Cook County. Zurich s U.S. insurance group is the fourth largest commercial property an casualty writer, providing a wide array of insurance products to small and mid-sized businesses, local governments and Fortune 500 companies. Zurich s new North American Headquarters 770,000 square foot world class and environmentally sustainable facility Symbol of growth and commitment to North American market Project creates as many as 700 vertical construction jobs, and utilize up to 900 additional skilled tradespeople for interior Set to open in fall of 2016

3 The Zurich Commitment Sums up our thinking about who we are, why we re in business, and what we offer our stakeholders We care about our customers. We care about our people. We care about our shareholders. We care about our communities. Our communities are where our customers, our people and our shareholders live and work. While we can be proud of the contribution to society Zurich makes through our core business of insurance, we must also give back to our communities through our talent, time and resources.

4 At Zurich Corporate Responsibility is embedded in the Group s strategy Code of conduct Integrity Excellence Customer centricity Sustainable value creation Team work We care about Shareholders Customers People Communities To support the development of our values and behavior, all employees are required to have a Zurich Commitment related objective

5 Our CR strategy When we overlay these values onto our business, we create a strategic direction for how Zurich conducts business responsibly our CR strategy Risk management CR in business transactions Flood resilience Investment management Responsible investment Our people Diversity & inclusion Our suppliers Responsible supply chain Our communities Community investment Our environmental impact Environmental performance, Health & safety

6 What do these images have in common? It wasn t the first time

7 Those who cannot remember the past are condemned to repeat it. George Santayana, The Life of Reason, 1905

8 Why flood resilience? Floods affect more people globally than any other types of natural hazard numbers show that floods and related issues affected more people than earthquakes, tornados, droughts, and hurricanes put together Flood risks are increasingly interconnected and interdependent and cannot be enhanced by one stakeholder alone As insurers we know the impact they have on people s lives and how much damage they can cause The flood resilience program is an alliance of five organizations The program comprises a five-year commitment, and includes an initial investment of $35.6 million by the Z Zurich Foundation Together with our alliance partners we focus on preevent flood mitigation, as opposed to post-event flood relief By bringing together partners with unique skills and expertise in hazard and risk management we can identify new and innovative solutions to prevent reduction

9 What are we doing differently? Knowledge for action - Research and modeling - Influence - Scientific credibility Global Reach - Community presence - Scale and reach - Influence and advocacy Catalyze - Risk engineering - Financial resources - Influence and advocacy Innovation & Technical Advice Methodologies & tools Technical Innovation - Small and agile - Innovation and ideas piloting - Solutions catalogue

10 Zurich s Experience with Catastrophes Insurance Delivering for customers and communities when it matters... Communications Tailored Programs Site Visits Claims Risk Mitigation Helping customers and communities mitigate the risks of potential (predictable) threats Risk Engineering Global Flood Resilience Program Post Event Review Capability (PERC) NOTE: Most disaster management work goes toward post-event relief, rather than mitigation.

11 What are our objectives? Zurich to become the best global insurer in enhancing community flood resilience - in thought and practice 1. Knowledge & expertise 2. Community impact 3. Role of insurance

12 Knowledge & Expertise Through our research cooperation with IIASA & Wharton, we will: Validate resilient systems & how to measure flood resilience Demonstrate the benefits of ex ante mitigation Present strategies to overcome key obstacles to flood resilience Implement action research programs together with community partners to apply and test different approaches and make the case for flood resilience Examine flood risk protection strategies in both developed and developing countries Through our Post Event Review Capability (PERC) we will: Build an in-house capability to better understand flood events and related catastrophes after major events have occurred using Zurich s Risk Engineering and Claims expertise

13 Our current community and research activities are looking at flood risk in different locations and settings Rural community flood resilience programs in region of Tabasco, Mexico Study of flood insurance and mitigation behaviors in New York, USA Post Event Review of the Central European Floods in June 2013 Flash floods & Early Warning System Analysis in Koshi & Karnali river basins, Nepal Urban & rural community flood resilience programs in Lima & Piura, Peru Urban & Rural community flood resilience programs in West Java, Indonesia Recurrent flooding & livelihoods program in Bangladesh

14 Motivation Why measure resilience? Many attempts to define and measure resilience No «one size fits all» - audience and context dependent Our motivation - Demonstrate the impact of our intervention on the ground no general measurement framework for disaster resilience has been empirically verified yet UNDP, Feb 14 Our aim address this measurement gap

15 Comprehensive approach to measure sources of resilience r 4 esilience c 5 Robustness Redundancy Resourcefulness Rapidity

16 Risk management methodology Category Factors Grading Human Capital Factors: sources of resilience; Category: made up of # factors; each factor contains one or several R s Social Capital.... Natural Capital.... Physical Capital.... Financial Capital.... A, B, C or D (or E) Resilience Score Measurement principles Hazard & Risk Engineering & Risk Management expertise

17 Ground reality testing

18 Zurich North America Principles of Resilience Community Benefit: Tying back the benefit of the initiative to a specific community (or communities) that are impacted by flood exposure. Successful programs can subsequently be enlarged to encompass multiple communities. Risk/Loss Mitigation: Reducing vulnerability to impact through asset improvements before catastrophe(s) strike. Demonstrable results will validate the investment. Risk/Loss Mitigation Community Benefit Resilience Actuarial Based Actuarial Based: Technical underwriting and actuarial standards need be applied, e.g. pricing of rate vs. risk. Programs that ignore the science behind risk, cost and infrastructure will not succeed. Legal/Litigation & Regulatory Certainty: Promote consistency, soundness and efficiency around claims management and compliance standards. Legal & Regulatory Certainty Long-Term Sustainability Long-Term Sustainability: Mitigation and/or re-building should ensure future resilience and alignment with Zurich sustainability principle.

19 Zurich in the Community Involve Invest Impact

20 Community impact The community resilience team Zurich s community resilience secondment program provides an opportunity to develop leadership skills, by using technical skills from our business on projects to help communities' cope with natural disaster Selected employees will spend 2-12 weeks delivering a project

21 Societal Impact: Economic Sustainability Resilience