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Milken Institute and Marsh urge new financing to close resilience gap
The report says global disaster losses have topped $200 billion annually for a decade, with uninsured losses now making up more than half of the total.
Global disaster losses have exceeded $200 billion each year over the past decade, and uninsured losses now account for more than half of the total, according to a report from the Milken Institute produced in partnership with Marsh, calling for new financing structures to mobilize private capital alongside governments and insurers.
The report points to rising weather risks and slower rebuilding and recovery after disasters, noting cascading impacts on residents, companies, and governments. As an example, it cites that more than a year after California wildfires, seven in 10 survivors were still displaced from their homes.
Insurance companies have warned about a widening gap between growing resilience needs and what is being invested today, including coverage shrinking or getting more expensive in high-risk areas. The report argues that at-risk communities generally lack the resources to invest proactively, so the gap between needed resilience spending and actual investment will continue to grow unless new models bring more capital in.
To address the protection gap, the report lays out five approaches aimed at attracting institutional and private-sector funding, including a stakeholder-driven community plan with early insurer engagement, a private-sector-led revolving loan fund, a district-backed resilience bond, a resilience innovation technology investment fund, and a state policy playbook. Reinsurance News reports that Caitlin MacLean, managing director at Catalytic Capital at the Milken Institute, said resilience can pay for itself, citing the IBHS FORTIFIED roof program that expanded from a state-enabled grant effort to 34 states.