Zurich Insurance will not be heavily impacted by the fires in California. "Farmers is prepared for such events and experienced in dealing with them,» Mario Greco said in an interview with Bloomberg TV at the World Economic Forum (WEF) in Davos.

This was not the first large fire in the U.S. Insurance companies will need to cooperate with authorities to prevent such events in the future. “These are recurring events, and more must be done. These are dramatic, terrifying, and should not happen again."

The Message Must Be Recognized

"The way the cities are structured, and LA especially, must be rethought," Greco continued. The type of housing construction, urban planning, and how people are protected—all of it must be reviewed. "I hope this time the message is strong enough so that they will act on this." The recent events should lead to a change in thinking.

The insurance industry, in general, is facing an increased level of risk. "This calls for companies with a strong balance sheet and strong skills to invest heavily. Everything we do today is data driven and based on technology. And it has to be connected. Not all companies can do that."

Technology and artificial intelligence will help assess risks correctly and work on solutions. "Authorities and governments also need to learn how to use that and draw the right conclusions."

More Climate-related Disasters

It is inevitable that, in the future, there will be more climate-related events. This is also due to the increasing urbanization and population density in particularly vulnerable regions.

"We are not shy of taking on risks and not shy of helping the customers. A lot of what we are doing is about prevention. We don’t like to just come with a check when the damage has happened."

Europe is a Sleeping Beauty

In terms of the global economy, Greco is particularly concerned about the situation in Europe. While the U.S. remains stable and Asia continues to grow, Europe is in a weak position. "Europe is the sleeping beauty and needs to wake up," said the CEO.

What’s needed is primarily investment, and it is high time something is done. "Europe often reacts only when it’s with its back to the wall. Action is needed, this is the time, do it."