By Jonathan Kinghorn | September 24, 2015

The Center for Research on the Epidemiology of Disasters publishes an Annual Disaster Review to provide valuable information on the occurrence of natural disasters and their impacts on society. The latest edition covers 2014, and it identifies China, the United States, the Philippines, Indonesia, and India as the five countries most frequently hit by natural disasters. For years now these same countries have regularly featured at the top of this annual list. Why do they keep showing up?

Location, Location, Location

Location matters, obviously. When it is not experiencing a multi-year "hurricane drought," the United States is ideally positioned to welcome many of the hurricanes that form in the Atlantic. And its west coast occupies a sizable chunk of the Circum-Pacific Belt, the so-called "Ring of Fire," along which most of the world's earthquakes occur.

China and the Philippines lie in the path of typhoons tracking westward, and both countries are vulnerable to seismic activity. Indonesia's 6,000 inhabited islands sit between the world's two most seismically active areas, the Circum-Pacific Belt and the Alpide Belt. These islands experience some of the planet's most devastating volcanic eruptions, earthquakes, and tsunamis as a result.

India's location places it at risk for tropical cyclones, which can deliver damaging winds and heavy precipitation, causing flooding thousands of kilometers inland. Flood is India's most frequent form of natural disaster.

Size Matters Too

In terms of landmass, the United States ranks third, China fourth, India seventh, and Indonesia 14th.The Philippines appears on this list in 67th place, but its more than 7,000 islands are spread over a considerable area.

All else being equal, countries occupying the most real estate in vulnerable regions will experience more disasters than smaller ones. No country experiences more typhoons than China, for example,and this is largely due to the extreme length of its coastline,making it a prime target. 

Multiple Risks

Another issue is the wide variety of hazards that each of these five countries is subject to. In addition to earthquakes and tropical cyclones, each experiences landslides, wildfires, inland flooding, coastal inundation caused by storm surge or tsunami, and a host of other perils.

The Annual Disaster Review notes that 324 triggered natural disasters were registered in 2014, the third lowest number reported in the last decade. China experienced an unusually high total, and the Philippines and Indonesia reported low numbers. In the Americas, disaster damage was 62% below the annual average for the preceding decade. The United States made it into the top five not because of one or two major catastrophes, but because it experienced numerous geophysical, hydrological, and meteorological disasters, as well as drought.

Resilience and Insurance

These five countries have much in common with respect to the perils they face, but there is also a major distinction to be drawn.

The United States has a very high economic exposure to natural hazards, but it is also a wealthy nation that has invested in a range of measures to help it withstand the impact of major natural disasters and rebound from them quickly. It enjoys economic strength, strong governance, well established infrastructure,effective disaster preparedness and response systems, and strong and uniformly implemented building regulations. It also benefits from high insurance penetration rates.

China, the Philippines, India, and Indonesia on the other hand,are all emerging economies, whose rapid economic development is outpacing their already limited capacity to withstand the impact of major disasters. Countries like these face the highest threat from natural disasters.

Insurance take-up rates in these countries are generally very low. According to Axco Insurance Information Services, in 2013 Property and Casualty Market premium as a percentage of GDP was 0.47 in India, 0.35 in the Philippines, 0.42 in Indonesia, and 1.08 in China; these compare with 3.17 in the United States. Property and Casualty insurance expenditure on a per capita basis in 2013 was USD 7.43 in India, USD 9.70 in the Philippines, USD 14.52 in Indonesia, and USD 72.46 in China-but a whopping USD 1,661.73 in the United States.

AIR's 2015 Global Modeled Catastrophe Losses report details key loss metrics from AIR's global industry exceedance probability (EP) curve. It provides global insured and insurable loss estimates based on the EP curve, and highlights the gap between insured and insurable exposures worldwide. Economic loss estimates, newly added in this report, can be used to facilitate public risk financing and the development of regional resiliency plans to help societies better prepare for catastrophes and reduce the ultimate costs.

Find out how AIR’s Global Resilience Practice can help you quantify and manage risks and prepare for disasters before they occur

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