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Global Sustainability Perspective: Flood Risk - Response Strategies

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Given the exponential rise in the number and severity of extreme weather events around the globe how will the existing risk transfer mechanisms be affected and what are the implications for commercial …

Given the exponential rise in the number and severity of extreme weather events around the globe how will the existing risk transfer mechanisms be affected and what are the implications for commercial property?

Learn more: http://www.joneslanglasalle.com/GSP/en-gb/Pages/Global-Sustainability-Perspective.aspx

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  • 1. Global Sustainability Perspective Flood Risk – Response Strategies April 2014
  • 2. Currently estimated at € 5.5 bn per annum, flood related property losses in Europe are predicted to increase 8 fold by 2050. While insurance companies rely on historic data to calculate risk premiums, it is becoming increasingly difficult to predict how the existing risk transfer mechanisms will be affected given the exponential rise in the number and severity of extreme weather events around the globe. What are the implications for commercial property? 1 ” “
  • 3. 30 1970s 60 1980s 110 1990s 120+ 2000 - 2013 Global increase in annual weather-related catastrophe events 1970 – 2013 Source: JLL Global Sustainability Perspective, April 2014: SIGMA 2013 - Global Natural Catastrophe Disasters, Swiss Re, March 2014, JLL Analysis
  • 4. Lower Manhattan, New York City: Lower Manhattan total office stock 101 million sq ft / 9.4 million sq m Total Losses 1 3 Stock out of operation one week after Hurricane Sandy 33.6 million sq ft / 3.1 million sq m US$6 5bn Insured losses US$ 30bn Total economic losses Evaluating Hurricane Sandy Impact Source: JLL Global Sustainability Perspective, April 2014 Munich Re, March 2013
  • 5. Of the total estimated property losses, 80%+ are attributable to residential and some 5% to commercial real estate, with the rest impacting industry, agriculture and transport Increase x 8 €5.5bn pa Flood damage 1970 - 2010 €46bn pa Flood damage 2050s (estimated) River flood losses in Europe: historic vs future Source: JLL Global Sustainability Perspective, April 2014 European Commission, Geneva, 2012
  • 6. Insurance cover Reinsurance cover For extreme but low frequency weather events Government rescue schemes In exceptional cases where no commercial cover exists Owner liability Absorbed by owners through excess and capped claims payments Property flood damage Through the recovery of insurance premiums Indirect transfer to tenants Absorbed through loss claims Property flood damage: risk transfer mechanisms Source: JLL Global Sustainability Perspective, April 2014
  • 7. COPYRIGHT © JONES LANG LASALLE IP, INC. 2014 For further information contact: Franz Jenowein
 Director, Global Sustainability Perspective Franz.Jenowein@eu.jll.com > > > Click here to view the latest edition of the Global Sustainability Perspective

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