Disasters threaten Manila’s economy
Manila’s economic exposure to natural threats is the highest in the world in terms of the share in gross domestic product, according to London-based insurance specialist Lloyd’s.
“As a percentage of its average annual GDP [gross domestic product], Manila’s economic exposure is the world’s largest [50.28 percent],” Lloyd’s said, citing the results of City Risk Index, a study it conducted with the University of Cambridge Judge Business School.
The index is the first analysis of economic output at risk (GDP at Risk) in 301 major cities from 18 manmade and natural threats over a ten-year period (2015 to 2025). The index estimated that a total of $4.6 trillion of projected GDP is at risk due to man-made and natural disasters in these cities around the world.
Lloyd’s Asia-Pacific managing director Kent Chaplin said natural threats accounted for more than 90 percent of Manila’s economic exposure. About $109 billion or over half of Manila’s GDP was at risk, the highest percentage in the Lloyd’s City Risk Index in percentage terms.
Manila’s GDP was placed at $201 billion, with average growth rate of 3.46 percent. Lloyd’s said of Manila’s total economic output, $109 billion or 50.28 percent was at risk due to natural threats.
The amount is the fourth highest in absolute terms behind Taipei, Tokyo and Seoul.
Natural threats such as wind storm, earthquake, volcano, flood, drought and tsunami accounted for 90 percent of GDP at risk, according to Lloyd’s.
In particular, about $60.66 billion of Manila’s economy was at risk to windstorm, $13.29 billion to earthquake, $5.81 billion to volcano and $5.46 billion to flood.
Manila’s economic exposure to wind storms is the second highest globally. “The impact of wind storms on the Philippines was starkly demonstrated in 2013, when Typhoon Haiyan killed more than 6,000 people and destroyed or damaged the homes of five million,” Lloyd’s said.
Manila is also located on the edge of the Ring of Fire, a series of tectonic faults and other volcanic features that produces around 90 percent of the world’s earthquakes. Consequently it has the world’s ninth highest economic exposure to earthquake, the fourth largest to volcano and the sixth largest to tsunami. It is ranked 10th globally by potential losses from drought.
Man-made threats account for $9.41 billion of risk to GDP, with market crash and oil price shock the most important. Human pandemic accounts for the majority of Manila’s emerging threats ($4.38 billion).
“Lloyd’s is keen to further grow our relationships with the Philippines insurance market and contribute to the development of the industry here by sharing our specialist product and underwriting expertise. Lloyd’s is committed to the Philippines and to helping develop the insurance industry,” Chaplin said.
Lloyd’s, the specialist insurance and reinsurance market, presented the results of the City Risk Index for Manila at the New World Makati Hotel, where 42 world’s leading insurance underwriters from Lloyd’s Asia hub in Singapore and from London visited the country to share their expertise with local insurance and reinsurance participants.
Lloyd’s said it introduced the concept of insurance in the Philippines when it appointed Strachman, Murray & Co., Inc. as its agent in the country in 1829.
Lloyd’s now provides cross border reinsurance for Philippine insurers and isupported the country to recover from many of the tragic extreme weather events including Typhoon Yolanda (Haiyan) in 2013.
Lloyd’s also offers specialist reinsurance products for Philippine business, covering risks associated with natural catastrophe, professional liability, construction, transport, energy, terrorism, political risk and cyber threat.
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