By Geoff Percival
Another global stock market crash is the single biggest insurance threat to the Dublin economy, potentially costing it around $520m (€440m) per annum, according to specialist insurance market Lloyd’s of London.
Lloyd’s ranks Dublin ninth out of 66 European cities in terms of GDP risk and said manmade risks, such as cyber-crime or market crashes, could deliver a $1bn hit to the capital’s economy each year.
“More than half of the GDP at risk identified for Dublin comes from finance, economics, and trade, reflecting the highly developed service economy that is flourishing here,” said Eamonn Egan, Lloyd’s general representative for Ireland.
“Policymakers can use the city risk index to make informed investments to ensure Dublin’s economy is resilient to external shocks,” said Mr Egan.
Lloyd’s said Dublin, with a GDP of over $196bn, risks losing an average $1.49bn in economic output when man-made and natural “catastrophes” are factored in. Commodity price shocks are the second costliest threats to the Dublin economy, with a threatened hit of $190m.
Natural events have the ability to cost Dublin insurers $490m, Lloyd’s warned, with flooding one of the top five costliest threats.
“Climate-related risks together account for $500m of Dublin’s risk to GDP and this sum is expected to grow as extreme weather events become increasingly frequent and severe,” it said.
Representative body Insurance Ireland has estimated that Storm Emma which battered Ireland, along with the so-called Beast from the East severe weather front, earlier this year, cost Irish insurers €39m, while last year’s Storm Ophelia cost around €45m.
On a wider basis, Lloyd’s estimated that if every city listed improved its resilience to the highest level then the value of risk to Europe’s GDP levels would decrease by as much as $2.6bn annually.
“No city will ever be completely risk free. Disruptions will always occur, whether it is the result of a hurricane or a cyber-attack... [But] the index shows that investing in resilience, from physical flood defences to digital firewalls and enhanced cyber-security, enhanced with insurance, will help significantly reduce the impact of extreme events on cities, improve economic stability, and enhance prosperity for all,” said Lloyd’s chairman Bruce Carnegie-Brown.