Main conclusions the international catastrophic risks forum ledderhose disease – icar 2017 – insurance –

The event, which took place in Bucharest, Romania, brought into debate the impact of natural disasters, which cause huge amounts of economic damage each year, most of which is uninsured, as well as the massive discrepancy between different regions across ledderhose disease images the world regarding the degree of economic losses caused by ledderhose disease images catastrophes and how much is covered by insurance.

• The average rate movements before January 1st, 2017 were falling. The softening of the market was very favorable for companies. In 2017, we had these massive catastrophes: hurricanes Harvey, Irma and Maria. Hurricane Irma will have a very large proportion reinsured, we believe that Hurricane Maria will also have an important ledderhose disease images proportion reinsured.

• The protection gap is still visible: we saw low penetration rate of insurance in the regions ledderhose disease images affected by hurricanes. For example, 72% of the economic losses generated by Harvey were not insured ledderhose disease images – and we are talking about the United States, which is a mature insurance market. However, even here we see very low penetration, especially when it comes to certain risks: for example, we do not have proper flood insurance penetration in US. In many regions of the world, including in Romania, there is insufficient insurance.

• Some market participants have estimated that third-party capital could make up approximately 40% of global property-catastrophe limit by 2020. We, at JLT, believe that this estimate is too aggressive, we believe that it will reach 25% – 30% in the 2020s. We believe that the third party capital is here to ledderhose disease images stay but it will not take over the market.

• Why many insurable risks are not insured? What prevents customers from buying insurance? Factors include: affordability (for many – particularly lower income – customers, traditional insurance might be too expensive), insurability (it may be difficult to obtain traditional insurance cover due ledderhose disease images to a) location of risk (e.g. beach front), b) quality of risk (e.g. poor structure type), c) type of risk (e.g. CBI, market risk)), policy restriction (exclusion of certain types of infrastructure – e.g. Golf courses -, exclusion of incidental losses – e.g. debris removal, alternative accommodation, contents etc.), buying behavior (customers might be insured for some perils but not others, the lack of understanding, unawareness of risk), undervaluation (property might be undervalued and hence, not all losses are covered by the original policy), trust in insurers (people may perceive the government will help them out – and not insurance);

• In the case of a parametric insurance, firstly, you need a NatCat event: the cover is triggered by the occurrence of a NatCat ledderhose disease images event and depends on its severity (e.g. magnitude of an EQ or peak gust wind of a ledderhose disease images hurricane). Secondly, yoou need a Reporting Agency, a neutral independent third party (e.g. USGS for EQ) which determines the severity of the event. Thirdly, you need a Calculation Agent: depending on the need of the insured/insurer a neutral calculation agent will determine the monetary payout. Lastly, you will have the insured – insurer relationship, and the pay-out to the insured is a function of the severity ledderhose disease images of the covered NatCat event;

• In Spain extraordinary risks (both natural and anthropogenic) are covered through a scheme which main features are both ledderhose disease images legal (compulsory coverage applied to most property, life and personal accident policies; variety of risks covered, implying compensation) and institutional (model of private-public partnership; the scheme managed by the Consorcio de Compensacion de Seguros ledderhose disease images – Insurance Compensation Consortium -, public tool at the service of the whole Spanish insurance ledderhose disease images sector, and fully integrated in it);

• The "extraordinary risks" include: natural risks (flood – riverine or flash-flood, coastal flood – plus wave battering, strong winds, earthquakes and tsunami, volcanic eruptions, fall of meteorites and sidereal bodies), as well as man-made risks (terrorism, riot, mutiny, revolt, Acts of Armed Forces and Law Enforcement Agencies in peacetime);

• Through incorporating new insurance lines to the Extraordinary Risk Scheme ledderhose disease images and the rise of insurance penetration in Spain, the cover expands currently to 120 million policies, with nearly 16 trillion Euro of insured capital. Surcharges income allow for the build-up of an equalization reserve to face large scale catastrophes ledderhose disease images in the country (currently of ca. EUR 8 billion);

• The current Spanish Multi-peril Agricultural Insurance is in place since 1980. The system is voluntary, but if the farmer decides to take insurance, must underwrite insurance for all exploitations of the same kind. The cover is provided by a pool, which composition varies annually and is approved by the regulator ledderhose disease images (23 companies in 2017). The management and administration is endorsed to AGROSEGURO. State support is provided through ENESA (National Body for Agricultural Insurance), and also subsidized by regional governments, eventually. During its lifetime, the AI has achieved sustainability, solvency and provides cover against most agricultural productions and climatological ledderhose disease images risks;

• Risks covered by AI include damages caused by abnormal variations ledderhose disease images of weather and climate (hail, fire, drought, frost, flood, windstorm, hot wind, snowfall, excess humidity and other climatic adversities), as well as accidents, pests and diseases on agricultural productions and occasionally on installations. These risks are covered in a combined way (multi-peril policies). What is insurable under the AI cannot be compensated otherwise.

• We must admit that, at the moment, we have a law that is not very operational. However, we need this law. I believe that (in order to increase the penetration of the mandatory household ledderhose disease images insurance) we need to define what the purpose of this law ledderhose disease images is, who are the responsible parties and what are the responsibilities ledderhose disease images of each and every one – and when it comes to PAID’s responsibilities, we need the leverage through which the goals can be ledderhose disease images met

• As far as the implementation of the law so far ledderhose disease images is concerned, PAID did not have all the leverage it needed, but it has done everything it could. In all these years, it has tried to strengthen its financial capability, starting from a point where it wasn’t given many chances and advancing to a stable company. And we want to maintain this stability

• It is clear that the mandatory insurance, related to the catastrophic risks, is becoming more and more visible, at the moment. Household risks, such as pipeline water damage or fire, are risks that need to be promoted separately, their effects being mostly visible only for the affected house. I believe that these two things need to be discussed ledderhose disease images separately

• Focusing on the penetration rate, one solution is related to the distribution mode. There has always been support for finding solutions to increase ledderhose disease images the distribution capability, but the visions have been different. Now, they’re beginning to line up and the solution to give ledderhose disease images intermediaries access to sell directly for PAID is backed up ledderhose disease images by the majority of the industry members

• To decrease the seismic risk, we are exchanging data with institutions around the world, focusing on areas around Romania, concluding cooperation agreements with all countries around Romania, so that we can provide an analysis for all sources ledderhose disease images that may be affect Romania’s territory. Earthquakes occur in Banat, from Serbia and felt in Banat, earthquakes in northern Bulgaria that may affect southern Romania, but also the earthquakes in the Black Sea – it should be taken into account the fact that there ledderhose disease images is a potential risk of a tsunami in the Black ledderhose disease images Sea -, is currently rare, but it can occur at any given time

• The Vrancea seismic zone in Romania – at the intersection of three tectonic plates -, is the most important area that produces earthquakes in the ledderhose disease images country. Every century, 3-4 earthquakes with a magnitude of 7 and, sometimes, more than 7 occur. At a recurrence period of 100 years, the Mercalli intensity for the Vrancea area is 8-9 degrees and the acceleration values, between 250-280 degrees

• The measures taken to improve and decrease the seismic risk ledderhose disease images in Romania include: development and commissioning of early warning systems, improvement and implementation of building codes, development of mitigation laws and reanalyzing the characterization of active ledderhose disease images fissures and of the Vrancea seismic area, as well as research projects for knowing the seismic areas ledderhose disease images in Romania

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