Weather Trends In Mauritius

1.0 OVERVIEW OF THE TOPIC

The weather is changing. Adverse weather patterns are increasing around the world. Natural catastrophes and particularly severe weather events are increasing in frequency and severity all over the globe. Extreme rains, heat waves, cold snaps, blizzards, floods and droughts are just some of the many weather events that are impacting peoples’ life and company’s profitability. For many businesses a small deviation from normal weather patterns can adversely affect their financial performance. Recent events around the world highlight the increasing volatility of the weather and how they can impair the economy.

Although the majority of businesses are exposed to weather risks, many are still failing to adequately identify

The contribution of the insurance industry to the GDP of the country increased from 2.8% in 2009 to 3.1% in 2013 (FSC, 2014). Local Insurance business is classified into long term Insurance Business (Life); and General Insurance Business (non-life). The insurance business is largely private-owned and is dominated by a few players. The Mauritian non-life market has consolidated and this consolidation has left the market with four major players, the largest of whom commands around 30% of the market. In 2011, Axco ranked Mauritius as the 108th non-life market in the world and the 60th life market. There were 14 insurers operating in the general insurance (non-life) market in late 2012, all of which were joint stock. Swan absorbed CIM Insurance effective 30 June 2012, and became the largest non-life company, with around 30% of the market. It has once again moved ahead of the merged Mauritius Union/La Prudence, trading under the name of Mauritius Union in the non-life market. The main companies offering general insurance are as follows: Mauritian Eagle Insurance, Mauritius Union General Insurance, SICOM and Swan Insurance Company

Damages from natural catastrophes or elementary losses are worldwide on the rise. Recent events around the world highlight the increasing volatility of the weather and how they can impair the economy. For many businesses a small deviation from normal weather patterns can have a negative impact on the company’s profitability. Many financial concerns may find their income streams affected by the weather, both directly or indirectly. While volatile weather activity can have a significant impact on companies in all sectors some are more sensitive to weather than others such as energy, retail, food, clothing, tourism, distribution, transport and construction. Catastrophic losses caused by natural disasters are much more problematic from an insurance standpoint. Rather than a large number of risks that on average follow a quite predictable year-to-year pattern, catastrophic losses tend to be lumpy. Catastrophic risks consequently pose a variety of problems for insurers. First, because the losses arise from a small number of lumpy events, the insurer may not have sufficient resources to cover the losses. Less dramatically, the firm may suffer losses well in excess of the value of the premiums that it charged for the coverage. In the absence of adequate reinsurance, the firm may go bankrupt or may choose to exit a state in which there is a substantial exposure to such catastrophic risks. However, insurance providers have