The impact of floods in Southeast Asia means new insurance strategies are needed

Southeast Asia is perpetually and increasingly at risk of flooding, with serious consequences for human life and health – not to mention economies and the environment. So now is the time to look for new strategies and solutions in a bid to save lives and avoid spiralling costs.
Statistics show a clear increase in the frequency and severity of flooding in Southeast Asia over the past few decades. According to the United Nations Office for the Coordination of Humanitarian Affairs, 9.6 million people in the region were affected by flooding in 2011, with 5.3 million in Thailand alone. That year, the Thai floods were labelled the worst in 50 years by the National Committee for Disaster Management and the Department of Hydrology.
Then a 2013 report by the Asian Development Bank revealed that in the period from 2000 to 2009, floods and storms caused 1,215 disasters in Asia compared with just 502 in the 1980s. Importantly, figures for geophysical disasters such as earthquakes, tsunamis and volcanic eruptions over the same period stayed roughly the same. So what’s going on? Is this a climate change issue or one of urban development? And most importantly, what can be done by those who are concerned about the situation in Southeast Asia? 
Reassessing our strategies
Anything that costs human life and health costs society. A report by the think tank World Resources Institute revealed that the poorest Southeast Asian countries are particularly at financial risk as a result of flooding. Vietnam has 2.29% of its total GDP exposed to river flooding alone, Cambodia 3.42% and Laos 2.22%.
Vietnam has 2.29% of its total GDP exposed to
river flooding alone, Cambodia 3.42% and
Laos 2.22%.
Across in Indonesia, floods are the most common natural disaster – 97% of disaster events between 2012 and 2014 were hydrometeorological, with floods the most frequent. They are also the most deadly: During the same period floods claimed more lives than any other natural event.
Then there’s the economic impact: The country is hit by flooding to some degree during every rainy season (just last month Indonesia had to contend with more rainfall in a day than it usually sees in a month), and these events hit the economy to the tune of more than USD 2 billion a year.
It’s a similar tale in Thailand where according to a report by the Geneva Association (International Association for the Study of Insurance Economics), the 2011 Thai flood disaster caused losses equivalent to 12% of its GDP – or USD 43bn. Without additional investment, climate change-related floods alone are predicted to lead to average annual economic losses across Asia of USD 500bn or more by 2050 – compared to average annual global flood losses of around USD 30bn between 2004 and 2013.
Insurance against these types of losses is particularly low in Asia. A report by German reinsurer Munich Re found that for every euro loss caused by a natural catastrophe in Asia, only eight cents were covered by insurance between 1980 and 2012 (compared with 40 cents for the US).
If we want to help Southeast Asia stay in control of the health and economic consequences of its current and future flood risk, we need to invest and rethink some of our strategies.
Here are some initial suggestions:
1. Invest in intervention and early warning: Early warning systems can save lives by giving people time to leave potential disaster zones. Investing in them should be a priority. In Vietnam, the Pacific Disaster Center has created VinAWARE. This integrates map data, impact models, rain- and stream-gauge measurements, and meteorological forecasts to provide early warnings and to give the government more time to make important decisions.
2. Invest in community knowledge and health: Many of the disease-related costs during and after a flood can be better managed by educating people on their own personal responsibility (to themselves and others) before and during flood events. Research by the University of Alberta, Canada, shows that such programmes are currently grossly underfunded.
As an example of what can be achieved, the Intermediate Technology Development Group in Bangladesh has concentrated efforts on helping local communities improve housing. Education on raising the foundations of homes, promoting durability by treating building materials, and improving ventilation has all been provided.
Educating local people on the need to maintain sanitation during a flood can also help to reduce the transmission of common post-flood diseases. The most frequently documented disease in the immediate aftermath of a natural disaster is diarrhoea – responsible for 40% of deaths in disaster and refugee camp environments. In most cases, its spread can be greatly limited simply through basic hygiene practices – regular hand-washing and ensuring the cleanliness of cooking and eating utensils, for example.
Educating local people on the need to
maintain sanitation during a flood can also
help to reduce the transmission of
communicable disease and outbreaks such as
Leptospirosis – a bacterial infection which elicits flu-like symptoms – is another disease which commonly spreads after heavy floods. Again, the spread of this disease can be greatly controlled if those in disaster-affected areas know what precautions to take. For example, adequate wound dressing and cleaning can go a long way in preventing an outbreak.
The WHO has already put initiatives in place to educate flood-affected communities on such measures – including teaching basic first aid to limit the number of exposed wounds and making sure the poor are properly vaccinated. This can also reduce infection rates and therefore the impact and cost on healthcare systems.
3. Close insurance gaps: The risk of flooding is a difficult thing to insure against and something many cannot afford. As the Economist has pointed out, tsunamis and cyclones do not seem a close enough threat to acknowledge on a day-to-day basis, even if the poor could afford the premiums. However, Southeast Asian governments could take note of what is happening around the rest of the world. Risk-pooling, whereby governments set up a multi-country, disaster-relief insurance, is a growing phenomenon, with the Caribbean Catastrophe Risk Insurance Facility a prime example. Started by the region’s governments, donors and experts from the World Bank, it provides rapid, short-term liquidity to a government affected by an earthquake or hurricane to provide relief to healthcare systems and local communities. This is contrary to traditional indemnity insurance, which takes far longer to pay out because payments are based on confirmation of a loss. 

4. Be proactive during each flood stage: By understanding the three key stages – before, during, and after the flood – we can reassess our risk and disease-management strategies. Before the flood, in the panic of moving to safer ground, there can be minor injuries which later become infected by contaminated floodwater. During the flood there is an immediate increase in physical injury and mortality. From this point on, communicable disease becomes a much greater problem. After the flood, many people are left homeless and malnourished. There is also of course the impact on mental health for those surviving such traumatic experiences. 
A time for new ideas
A recent study in the journal Nature noted that, on a global scale, we can blame climate change many of the flooding problems we are seeing, but hone in on Southeast Asia and the story is more complex. A much bigger contributor to flooding here is caused by rapid socio-economic growth. Simply put, uncontrolled and unplanned urban development is raising the risk of floods, and the impact could be devastating. Estimates for Thailand alone suggest the annual costs of flooding may reach USD 22.5bn by 2030.
“Estimates for Thailand alone suggest
the annual costs of flooding may reach
USD 22.5bn by 2030.”
Given what we know about the growing prevalence and health risks of floods, governments, communities and insurance companies in Southeast Asia appear to be in sleepwalk mode.
The reality is that our knowledge of what can be done is high but ideas about how to afford and implement them are low. However, given predictions for climate change and other factors that will increase flood risk in vulnerable communities, no time should be wasted in devising innovative new strategies and solutions that will help to save lives, avoid health disasters and ultimately save millions of dollars.
About the author
John Le Boeuf, Founder and CEO of Cynergy Care
John Le Boeuf is the founder of Cynergy Corporation and has served as President & CEO of the various Cynergy companies since 2002. With a solid two decade senior management experience with key international and US managed health care companies, John has worked with market-leading companies such as Blue Cross Blue Shield, Mutual of Omaha Companies, and Cigna Health Care.