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INSURANCE

Think tank warns of extreme weather risks

Climate change is creating more frequent and more unpredictable extreme weather events, forcing insurers to change how they assess the risk of natural disasters hitting a specific area, the Geneva Association think tank said on Monday.

Think tank warns of extreme weather risks
Downed trees in Carouge, in the canton of Geneva, following a storm last week. Photo: Niaz Al-Haq

"Traditional approaches, which are solely based on analysing historical data, increasingly fail to estimate today's hazard probabilities," the think tank for strategically important insurance and risk management issues, warned in a report.

"A paradigm shift from historic to predictive risk assessment methods is necessary," it stressed, adding that the insurance industry needed to support scientific research to gain a better understanding of when and where weather-related disasters will hit.

According to a UN report last month, natural disasters have cost the world $2.5 trillion so far this century, which is far higher than previously estimated.

The Geneva Association's chief, John Fitzpatrick, pointed out Monday that the warming of the world's oceans and rising sea levels were especially a key driver of extreme weather events.

"Ocean warming has effectively caused a shift towards a 'new normal' for a number of insurance-relevant hazards," he said in a statement.

"The shift is quasi irreversible — even if greenhouse gas emissions completely stop tomorrow, oceanic temperatures will continue to rise."

In the 38-page report, titled "Warming of the Oceans and implications for the (re)insurance industry," the Geneva Association says insurers need to not only look at historical data but to also understand "changes of ocean dynamics and the complex interaction between the ocean and the atmosphere."
   
This, it said, was "key to understanding current changes in the 
distribution, frequency and intensity of global extreme events relevant to the insurance industry, such as tropical cyclones, flash floods or extra-tropical winter storms."

The study, headed by Falk Niehorster of the Risk Prediction Initiative of the Bermuda Institute of Ocean Science, acknowledged that the main driver of rising insurance costs was linked to socio-economic factors, like a growing number homes for the wealthy built in coastal areas and flood plains.

However, it said, the lack of historical data to predict future catastrophes, as well as competing theories among scientists on when and where they will strike was also making it difficult for insurers to accurately price the risks.

The best way to ensure that "ambiguous risks" remain insurable, the study said, was for the insurance industry to help promote risk mitigation today.

It should also "play an active role in raising awareness of risk and climate change through risk education and disseminating high-quality risk information," the study concluded.

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INSURANCE

EXPLAINED: Why you need ‘legal protection insurance’ in Switzerland

Swiss insurance companies offer a variety of services, but the one covering legal disputes is among the most popular ones. This is what you should know about it.

EXPLAINED: Why you need 'legal protection insurance' in Switzerland
Law and order: Legal insurance may make it easier. Photo by Sora Shimazaki from Pexels

The Swiss like to be prepared for all kinds of disasters — both real and imaginary.

This is where insurance comes in.

Whether it’s a policy that covers damages inflicted on cars by weasels, or insurance for theft of sleds and skis placed outside a mountain restaurant, people here don’t like to leave anything to chance.

One of the most popular optional coverages — as opposed the health insurance, which is compulsory — is legal protection insurance (Rechtsschutzversicherungen in German, protection juridique in French, and protezione giuridica in Italian).

What is it and what does it cover?

Simply put, it covers attorney and other associated fees if you undertake court action against someone, are sued, or simply need legal advice.

There are two different types of legal protection insurance — one specifically for traffic accidents and the other for all other matters. Sometimes they are combined.

Typically, this insurance covers costs of legal representation associated with contract disputes, employment, loans and debts, healthcare, housing, retail purchases, and travel.

Photo by Rodnae Productions from Pexels

Some carriers also insure cases related to marital law and inheritance.

Most will not cover attorney fees for criminal cases where you are the perpetrator, or financial disputes related to asset management, banking and investment.

Also excluded is legal action related to political or religious activism.

Can you choose your own lawyer or will you have one assigned to you by the insurance company?

Typically, an insurer has a roster of approved attorneys with whom it works. Some allow the client to choose from the list, while  others select one for you.

If your own lawyer is part of your insurer’s roster, you can request he or she represents you, but it is not guaranteed.

How much does this insurance cost?

Fees vary depending on what coverage you need (traffic accidents, general, or combined), whether they have deductibles, and how high they are.

You can compare the premiums by using this link.

Do you actually need this coverage?

As is the case with any optional insurance, you don’t need it until you do.

Generally speaking, and according to online consumer comparison site Moneyland.ch, “if you require legal consultation at least once every two years, getting personal legal insurance often makes financial sense. Just the legal consultation benefits which you get with some insurance policies can make up for the cost of premiums”.

READ MORE: How much does health insurance cost in Switzerland?

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