NU Online News Service, Aug. 13, 11:12 a.m. EDT
Russian wildfires that have engulfed hundreds of thousands of acres will likely have minimal insurance impact, according to one expert.
Robert Muir-Wood, chief research officer for Risk Management Solutions, said that although 2,000 properties have been damaged or destroyed due to the more than 500 fires that continue to burn in Russia, insurance coverage is very low as the government promises to cover property damage caused by the fires.
"There's no thought to get insurance if the government steps in to pay when there is a loss, but that's how it is in Russia," Mr. Muir-Wood said.
The fires are dwindling in number and the smoke that has hovered over Moscow was blown away by wind, according to reports. Mr. Muir-Wood said the fires have enough fuel--in this case dried peat--to burn for months.
In a recent report on Russian agriculture, Swiss Re said the wildfires point out a need for increased insurance penetration.
"The time has come now to think about how innovative insurance solutions can help soften such blows in the future," wrote Juerg Trueb, head of the atmospheric perils group at Swiss Re.
The heat has destroyed crops in Russia, and many farmers do not have insurance protection. The Russian government has helped with subsidies and loans, but farmers face serious financial difficulties, and destruction to crops such as feeding and barley could drive up costs for meat and beer, Mr. Trueb said.
"This disaster underscores the need for a concerted strategy on the part of the state, the insurance industry, loan providers and the farming sector to improve insurance penetration significantly to deal with the financial consequences of such events," said Swiss Re's Reto J. Schneider, head of agriculture in Europe and Asia.
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