Archive for July, 2016



July 29th, 2016

Week’s Top Stories: July 23 - 29, 2016

Posted at 6:30 AM ET

Nanotechnology: The Plastics of the 21st Century: Many scientists view nanotechnology as the revolutionary technology of the 21st century. Just as plastics were a pervasive and revolutionary product of the 20th century, nanotechnology products are having widespread use and change our lives in a myriad of ways. This technology has quickly evolved into a global force that is transforming manufacturing, medicine and an ever increasing number of consumer/food goods. The field has become a worldwide market worth an estimated USD 1 trillion and is projected to grow at a rate of 16.5 percent through 2020.

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Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review providing an in-depth analysis of risk management practices and policies of 67 insurance and reinsurance companies located in Europe, United States, Bermuda, and Asia-Pacific. Based on publicly-available data from financial and risk reports, Guy Carpenter’s ERM Benchmark Review reveals that most (re)insurers are managing capital with metric-based frameworks and are publishing more about their risk management targets than seen in Guy Carpenter’s 2009 analysis. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

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Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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And, You May Have Missed…

Earthquake Coverage In Japan: Japan is known for its earthquake potential; and like many other earthquake-prone countries, the government participates in insuring earthquake risk. For houses and residential buildings there are two major sources of earthquake insurance. One is via commercial non-life insurance companies with support from the government and the other is via cooperative insurers. For all buildings and man-made structures other than houses and residential buildings, earthquake insurance is available from commercial non-life insurance companies, albeit on a strictly controlled basis.

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July 28th, 2016

New Economics Are Creating New Medicine, Part I

Posted at 1:00 AM ET

Through the Affordable Care Act, many measures are being implemented that are expected to have a positive impact on bending the healthcare cost curve downward in the long term. However, the same act removed annual and lifetime limits for medical insurance claims. As a result, the maximum potential loss from a single individual is a new frontier of risk, with new heights being reached each year. This is both a frequency and severity issue.

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July 27th, 2016

Nanotechnology: The Plastics of the 21st Century, Part II

Posted at 1:00 AM ET

As optimistic as researchers may be, however, responsible decisions must be made regarding nanotechnology’s development and use. Growing evidence suggests that nanoparticles - the basic building blocks of nanotechnology and the tiniest materials ever engineered and produced - may pose environmental, health and safety risks. As such, it appears that the industry is currently caught between stages 2 and 3 of the insurance coverage cycle below:

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July 26th, 2016

Nanotechnology: The Plastics of the 21st Century, Part I

Posted at 1:00 AM ET

Many scientists view nanotechnology as the revolutionary technology of the 21st century. Just as plastics were a pervasive and revolutionary product of the 20th century, nanotechnology products are having widespread use and change our lives in a myriad of ways. This technology has quickly evolved into a global force that is transforming manufacturing, medicine and an ever increasing number of consumer/food goods. The field has become a worldwide market worth an estimated USD 1 trillion and is projected to grow at a rate of 16.5 percent through 2020 (1).

Continue reading…

July 25th, 2016

Benchmarks for Enterprise Risk Management Disclosures

Posted at 1:00 AM ET

Here we present GC Capital Ideas’ stories on analyses of enterprise risk management disclosures. A 2014 study updated the analysis done in 2009, one of our most popular stories. The full briefings are attached.

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July 22nd, 2016

Week’s Top Stories: July 16 - 22, 2016

Posted at 6:30 AM ET

Cyber Gaps in Traditional Insurance Products/Standalone Insurance Products: Although the insurance market has developed a dedicated product line that addresses the initial risks faced by companies, such as data breach and business interruption due to network failure, traditional insurance products in their design have not historically contemplated the exposure to protect against cyber risks. Companies can purchase cyber specific cover in the form of extensions to traditional policies or as standalone cyber policies.

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Evolution of Risk Capital: The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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China Risk Oriented Solvency System (C-ROSS): The China Insurance Regulatory Commission (CIRC) is instituting sweeping changes through its three-tiered China Risk Oriented Solvency System (C-ROSS) framework that will dramatically impact how (re)insurers conduct business. It will strengthen capital requirements, risk management and transparency disclosures - bringing China in line with, and in some cases overtaking, global standards. The C-ROSS framework is similar to Solvency II: three tiers focusing on quantitative, qualitative and disclosure requirements.

Read the article>>


And, You May Have Missed…

Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

Read the article>>


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July 21st, 2016

Value in Enterprise Risk Management Practices

Posted at 1:00 AM ET

Here we review GC Capital Ideas posts on the benefits of enterprise risk management practices in supporting (re)insurance capital and regulatory decision making.

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July 20th, 2016

Alternative Capital Shaping Risk Transfer

Posted at 1:00 AM ET

Here we review GC Capital Ideas posts on how alternative capital has impacted the dynamics of risk transfer.

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July 19th, 2016

The Impact of Catastrophe Exposure to Public Entities

Posted at 1:00 AM ET

Here we review GC Capital Ideas posts on how catastrophic exposures are adversely impacting public entities.

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July 18th, 2016

The Challenge Of Cyber Exposure

Posted at 1:00 AM ET

Here we review GC Capital Ideas posts on the challenge the peril of cyber risk poses for (re)insurers and rating agencies and how the management of this risk is evolving.

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