Sydney Hedberg, Associate Director, Marsh McLennan Advantage, talks about community-based catastrophe insurance, an idea developed by Guy Carpenter, as an effective approach to encouraging resilience in areas susceptible to wildfires, earthquakes and other natural disasters. Her insights are offered as a complement to The Global Risks Report 2022, published by the World Economic Forum in collaboration with Marsh McLennan.
Sydney emphasizes the need for multiple partners—national, state and local governments, along with the private sector—to join forces and share responsibility for providing coverage against these perils in vulnerable regions. In the case of wildfires, holding controlled burns, building structures with fire-resistant materials and discouraging development in wildland-urban interface areas are key elements in dealing with these risks.
She also discusses alternative forms of insurance, such as parametric covers, in which a specific metric, such as Richter scale readings for an earthquake, triggers coverage, streamlining the claims process and complementing traditional indemnity insurance. Catastrophe bonds also play a key role, providing capital to protect against the risk of large natural catastrophes.