Archive for the ‘Week in Review’ Category



May 17th, 2019

Week’s Top Stories: May 11 - 17, 2019

Posted at 10:00 AM ET

A Risk Overview of Wildfire: Today, the frequency and severity of wildfires are garnering greater attention-not only from the media, but also from (re)insurers, catastrophe modelers, mitigation experts and other invested parties. As the industry searches for better understanding of this dynamic risk, Guy Carpenter’s GC Wildfire Diagnostic (SM) helps carriers differentiate and drive profitable growth using a bespoke selection of innovative, technology-based tools and services that span the disciplines of underwriting strategy, analytics and risk transfer.

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Flood Risk Challenges in Asia: Flood is one of the most significant natural catastrophe perils, globally accounting for nearly 40 percent of all catastrophe events. In 2017, floods accounted for nearly half of the natural catastrophe events and 65 percent of natural catastrophe deaths in the world - two thirds of the deaths occurring in Asia. According to the Lloyd’s City Risk Index, which examines flood risk as a percentage of GDP, nine of the top 10 cities at risk are located in Asia.

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Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, Year-End 2018: Chart presents combined ratio of the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2018.

View the chart >>


The Middle East and North Africa Risks Landscape: The results of climate inaction are becoming increasingly clear. The year 2018 was the fourth warmest on record. In the MENA region, Algeria had the hottest temperature - 51.3ºC - ever reliably recorded across the whole of Africa, and Oman recorded a minimum temperature of 42.6ºC. Rising temperatures led the United Nations to warn that melting ice sheets were causing sea-level rise to accelerate. The World Bank identified 24 port cities in the Middle East and 19 in North Africa at particular risk of rising waters.

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A Dynamic Approach to Managing Life Reinsurance Arrangements: The traditional life reinsurance model typically involves perpetual treaties linked to an underlying product. In order to create alignment between the contracting parties, the treaty would follow the underlying terms of the product. However, the treaty structure may concurrently include provisions that reduce alignment between the insurer and reinsurer, to the insurer’s detriment. This approach is often wrapped in the reinsurer’s “value proposition” - providing services to support the pricing, underwriting and claims management of the underlying product.

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And, you may have missed….

Methodological Considerations in the Statistical Modeling of Catastrophe Bond Prices: John Major has authored an article that aims to help actuaries, financial analysts, statisticians, data scientists and their clients better investigate how property catastrophe risk, and particularly catastrophe bonds, are  priced.

Read the article >>


Click here for additional Guy Carpenter insights >>

May 10th, 2019

Week’s Top Stories: May 4 - 10, 2019

Posted at 10:00 AM ET

Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, Year-End 2018: Chart presents combined ratio of the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2018.

View the chart >>


Understanding Flood Risk in Malaysia Through Catastrophe Modeling: According to Malaysia’s Department of Irrigation and Drainage, the many rivers running through the country put about 9 percent of the total land area under flood risk, potentially affecting 2.7 million people. Rapid urbanization is only going to worsen the problem through rising population concentrations and at-risk infrastructure, land consumption and the channeling of water courses.

Read the article >>


A Dynamic Approach to Managing Life Reinsurance Arrangements: The traditional life reinsurance model typically involves perpetual treaties linked to an underlying product. In order to create alignment between the contracting parties, the treaty would follow the underlying terms of the product. However, the treaty structure may concurrently include provisions that reduce alignment between the insurer and reinsurer, to the insurer’s detriment.

Read the article >>


Methodological Considerations in the Statistical Modeling of Catastrophe Bond Prices: John Major has authored an article that aims to help actuaries, financial analysts, statisticians, data scientists and their clients better investigate how property catastrophe risk, and particularly catastrophe bonds, are  priced.

Read the article >>


Are You at Risk? Managing Affirmative and Silent Cyber Risk Accumulation: The script of the global cyber insurance market is still mainly being written in the United States. Approximately 85 percent of global cyber insurance premiums of between USD 2.5 and 3.5 billion are generated in the United States. The take-up rate for this line of business in Asia is still relatively low, but the Japan market has been experiencing steady growth in the last 24 months.

Read the article >>


And, you may have missed….

A Matter of Time: Why the Clock is Ticking on Stop-Loss Reinsurance: As cutting-edge science leads to new, high-cost drugs and therapies, insurers are seeing uncapped claims costs grow higher. Stop-loss reimbursements generally are on the rise, with an increasing number of employers being reimbursed for a stop-loss claim every year.

Read the article >>


Click here to register to receive e-mail updates >>

May 3rd, 2019

Week’s Top Stories: April 27 - May 3, 2019

Posted at 10:00 AM ET

Methodological Considerations in the Statistical Modeling of Catastrophe Bond Prices: John Major has authored an article that aims to help actuaries, financial analysts, statisticians, data scientists and their clients better investigate how property catastrophe risk, and particularly catastrophe bonds, are  priced.

Read the article >>


Closing The Gap: Insurance Penetration and Public Sector Risk Financing in Asia Pacific: In recent years, the issue of low penetration in catastrophe insurance across the growing economies of Asia Pacific, and the critical protection gap between economic losses caused by natural disaster events and insurance-covered losses are receiving the attention they merit. The insurance industry can play a significant role in narrowing the gap to help ensure sustainable economic development in one of the most dynamic regions of the world.

Read the article >>


Understanding Flood Risk in Malaysia Through Catastrophe Modeling: According to Malaysia’s Department of Irrigation and Drainage, the many rivers running through the country put about 9 percent of the total land area under flood risk, potentially affecting 2.7 million people. Rapid urbanization is only going to worsen the problem through rising population concentrations and at-risk infrastructure, land consumption and the channeling of water courses.

Read the article >>


A Matter of Time: Why the Clock is Ticking on Stop-Loss Reinsurance: As cutting-edge science leads to new, high-cost drugs and therapies, insurers are seeing uncapped claims costs grow higher. Stop-loss reimbursements generally are on the rise, with an increasing number of employers being reimbursed for a stop-loss claim every year.

Read the article >>


Are You at Risk? Managing Affirmative and Silent Cyber Risk Accumulation: The script of the global cyber insurance market is still mainly being written in the United States. Approximately 85 percent of global cyber insurance premiums of between USD 2.5 and 3.5 billion are generated in the United States. The take-up rate for this line of business in Asia is still relatively low, but the Japan market has been experiencing steady growth in the last 24 months.

Read the article >>


And, you may have missed….

Investing in a Time of Climate Change - The Sequel: A new report, Investing in a Time of Climate Change - The Sequel, documents Mercer’s latest climate scenario model for assessing the effects of both climate-related physical damages (physical risks) and the transition to a low-carbon economy (transition risks) on investment return expectations.

Read the article >>


Click here for more insights from Guy Carpenter >>

April 26th, 2019

Week’s Top Stories: April 20 - 26, 2019

Posted at 10:00 AM ET

Facultative or Treaty and Why the Need for Hybrid Solutions: Insurers face challenges in managing underwriting, capital protection, risk and risk profiling as they navigate underwriting guidelines based on their gross and net risk underwriting appetite. Against these challenges, companies utilize various forms of reinsurance, traditionally facultative or treaty, to buy risk protection, shore up capital and satisfy rating agencies.

Read the article >>


NotPetya Was Not Cyber “War”: NotPetya wreaked havoc for some large companies, costing them billions of dollars in lost revenue, damaging computer systems, and requiring significant expense to restore global operations. In its wake, entire industries reassessed their practices for patching, business continuity, supply chain interruption, and more.

Read the article >>


A Matter of Time: Why the Clock is Ticking on Stop-Loss Reinsurance: As cutting-edge science leads to new, high-cost drugs and therapies, insurers are seeing uncapped claims costs grow higher. Stop-loss reimbursements generally are on the rise, with an increasing number of employers being reimbursed for a stop-loss claim every year.

Read the article >>


Investing in a Time of Climate Change - The Sequel: A new report documents Mercer’s latest climate scenario model for assessing the effects of both climate-related physical damages (physical risks) and the transition to a low-carbon economy (transition risks) on investment return expectations. The Sequel models three climate change scenarios, a 2°C, 3°C and 4°C average warming increase on preindustrial levels, over three timeframes - 2030, 2050 and 2100.

Read the article >>


Affirmative versus Silent Cyber: An Overview: While the current debate over “affirmative” versus  “non-affirmative” coverage has been ongoing for a few years, WannaCry and Petya/NotPetya cyberattacks helped make the issue of “silent cyber” more critical. These two 2017 cyberattacks effectively shifted the conversation from data breach, notification costs and third-party liability to first-party liability insuring agreements due to the extent and expanse of the systematic, large-scale damages they triggered.

Read the article >>


And, you may have missed….

The Transformation of Australian and New Zealand Life Insurance: The life insurance industry in Australia is facing unprecedented challenges from forces within and from the effects of an increasingly globalized economy. As life industry profitability has declined in Australia in recent years, the underlying manufacturing business model is rapidly changing.

Read the article >>


Click here to request updates from Guy Carpenter >>

April 19th, 2019

Week’s Top Stories: April 13 - 19, 2019

Posted at 10:00 AM ET

When the Going Gets Tough, the Tough Get Going: Overcoming the Cyber Risk Appetite Challenge: The scale of recent attacks and resulting media attention, supervisory pressures to upgrade cyber risk management and the pace of technology innovation to keep up with are increasing rapidly. These factors are compelling financial institutions to have a clear understanding of the cyber risks they face, and to determine the level of cyber risk the institution is willing to accept.

Read the article >>


Facultative or Treaty and Why the Need for Hybrid Solutions: Insurers face challenges in managing underwriting, capital protection, risk and risk profiling as they navigate underwriting guidelines based on their gross and net risk underwriting appetite. Against these challenges, companies utilize various forms of reinsurance, traditionally facultative or treaty, to buy risk protection, shore up capital and satisfy rating agencies.

Read the article >>


Evolving Regulatory Pressures Signal Potential Turning Point in Cyber Risk Management Strategies: Cyber risk presents an exciting opportunity for re/insurers, but as one of the most dynamic perils in the industry, regulators are formalizing capital requirements and quantitative and qualitative measurements of risk appetite.

Read the article >>


The Transformation of Australian and New Zealand Life Insurance: The life insurance industry in Australia is facing unprecedented challenges from forces within and from the effects of an increasingly globalized economy. As life industry profitability has declined in Australia in recent years, the underlying manufacturing business model is rapidly changing.

Read the article >>


Insurance Risk Management 2025: Navigating the Digital Future: How could the insurance industry look in 2025, and what are the implications for the Risk function? A video from Guy Carpenter affiliate Oliver Wyman offers a futuristic glimpse of a rapidly evolving industry.

Read the article >>


And, you may have missed…

First Singapore Catastrophe Bond Sets Stage for ILS Expansion in Asia-Pacific: The first catastrophe bond has been issued out of Singapore. This highlights the potential of the insurance- linked securities (ILS) market in the region, and is aligned with the city-state’s efforts to establish itself as a global hub for Asian risk transfer. The bond is sponsored by Insurance Australia Group (IAG) as part of its 2019 catastrophe aggregate reinsurance cover and represents the first such transaction by the company.

Read the article >>


Click here to register to receive email updates >>

Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities LLC, MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.

April 12th, 2019

Week’s Top Stories: April 6 - 12, 2019

Posted at 10:00 AM ET

Insurance Risk Management 2025: Navigating the Digital Future: How could the insurance industry look in 2025, and what are the implications for the Risk function? A video from Guy Carpenter affiliate Oliver Wyman offers a futuristic glimpse of a rapidly evolving industry.

View the video >>


Amid Regulatory Scrutiny Financial Institutions Must Monitor Third-Party Cyber Risk: Cybersecurity ranks among the top concerns for banks, insurers, and other financial institutions, which can represent prime targets for cyber-attackers and be vulnerable to potential disruptions because of their often-complex technology systems and the valuable financial assets and rich customer data they can hold.

Read the article >>


Asia’s Health Care Industry Reels from Cyberattacks: Health care is one of the sectors most vulnerable to cyberattacks, with more than one in four (27 percent) health care organizations reporting that they have been a victim of a cyberattack in the past 12 months. This is more than financial institutions (20 percent) and nearly twice the incidence in the communications, media and technology sector (14 percent). Despite this, respondents from the health care industry underestimate the likelihood of a cyberattack.

Read the article >>


Are You at Risk? Managing Affirmative and Silent Cyber Risk Accumulation: The script of the global cyber insurance market is still mainly being written in the United States. Approximately 85 percent of global cyber insurance premiums of between USD 2.5 and 3.5 billion are generated in the United States. The take-up rate for this line of business in Asia is still relatively low, but the Japan market has been experiencing steady growth in the last 24 months.

Read the article >>


Chart: Evolution of the Sidecar Market: Chart presents the evolution of sidecar capacity compared with the Global Property Catastrophe ROL Index, 2005 - 2018.

View the chart >>


And, you may have missed….

Chart: Global Property Catastrophe ROL Index: The Guy Carpenter Global Property Catastrophe Rate on Line (ROL) index is presented for 1990 through 2019.

View the chart >>


Click here to register to receive email updates >>

April 5th, 2019

Week’s Top Stories: March 30 - April 5, 2019

Posted at 10:00 AM ET

Are You at Risk? Managing Affirmative and Silent Cyber Risk Accumulation: The script of the global cyber insurance market is still mainly being written in the United States. Approximately 85 percent of global cyber insurance premiums of between USD 2.5 and 3.5 billion are generated in the United States. The take-up rate for this line of business in Asia is still relatively low, but the Japan market has been experiencing steady growth in the last 24 months.

Read the article >>


Chart: Evolution of the Sidecar Market: Chart presents the evolution of sidecar capacity compared with the Global Property Catastrophe ROL Index, 2005 - 2018.

View the chart >>


A Risk Overview of Wildfire: Today, the frequency and severity of wildfires are garnering greater attention-not only from the media, but also from (re)insurers, catastrophe modelers, mitigation experts and other invested parties.

Read the article >>


Asia’s Health Care Industry Reels from Cyberattacks: Health care is one of the sectors most vulnerable to cyberattacks, with more than one in four (27 percent) health care organizations reporting that they have been a victim of a cyberattack in the past 12 months. This is more than financial institutions (20 percent) and nearly twice the incidence in the communications, media and technology sector (14 percent). Despite this, respondents from the health care industry underestimate the likelihood of a cyberattack.

Read the article >>


Chart: Global Composite Return on Average Equity, 2005-YE 2018: Chart reports Return on Average Equity for the Guy Carpenter Global Composite compared against the five-year weighted average.

View the chart >>


And, you may have missed….

Top Country-Specific Risk Insights for Business: Asia Pacific: Regional heterogeneity across the Asia Pacific region has translated to diversified sets of concerns in different countries/territories. Correspondingly, businesses, particularly those with international and regional operations, need to be able to deal with more risks from multiple sources.

Read the article >>


Click here to register to receive e-mail updates >>

March 29th, 2019

Week’s Top Stories: March 23-29, 2019

Posted at 10:00 AM ET

A Risk Overview of Wildfire: Today, the frequency and severity of wildfires are garnering greater attention - not only from the media, but also from (re)insurers, catastrophe modelers, mitigation experts and other invested parties.

Read the article >>


Chart: Global Composite Return on Average Equity, 2005-YE 2018: Chart reports Return on Average Equity for the Guy Carpenter Global Composite compared against the five-year weighted average.

View the chart >>


Top Country-Specific Risk Insights for Business: Asia Pacific: Regional heterogeneity across the Asia Pacific region has translated to diversified sets of concerns in different countries/territories. Correspondingly, businesses, particularly those with international and regional operations, need to be able to deal with more risks from multiple sources.

Read the article >>


Aviation Industry May Be Vulnerable to Cyberattack Through Its Global Supply Chain: While major aircraft manufacturers and airlines make obvious targets because of the potential they represent to conspicuously disrupt international commerce, they also rank high on hackers’ to-do lists because they maintain global, highly interconnected supply chains that over the past few years have been aggressively digitizing operations. More digitization means more attack surface for hackers.

Read the article >>


Chart: Evolution of the Sidecar Market: Chart presents the evolution of sidecar capacity compared with the Global Property Catastrophe ROL Index, 2005 - 2018.

View the chart >>


And, you may have missed….

Climate Change Has Claimed Its Biggest Corporate Victim; Now Banks Are on Alert: When PG&E filed for Chapter 11 protection in January, The Wall Street Journal dubbed it the “first climate change bankruptcy.” The California power utility was facing USD 30 billion in potential liabilities following a series of devastating wildfires linked to its equipment-wildfires made more likely by a prolonged period of hot, dry weather that had reduced the surrounding forests to tinder and which scientists have since attributed to climate change.

Read the article >>


Click here to register to receive email updates >>

March 22nd, 2019

Week’s Top Stories: March 16 - 22, 2019

Posted at 10:00 AM ET

Global Cyber Terrorism Incidents on the Rise: The nature of the terrorism threat facing society has changed considerably in the last 20 years. Previously, governments and (re)insurers structured their mitigation strategies and responses to deal with attacks that were large in scale.

Read the article >>


Climate Change Has Claimed Its Biggest Corporate Victim; Now Banks Are on Alert: When PG&E filed for Chapter 11 protection in January, The Wall Street Journal dubbed it the “first climate change bankruptcy.” The California power utility was facing USD 30 billion in potential liabilities following a series of devastating wildfires linked to its equipment. Wildfires were made more likely by a prolonged period of hot, dry weather that had reduced the surrounding forests to tinder and which scientists have since attributed to climate change.

Read the article >>


The Transformation of Biological Risks: Deliberate Attacks: Received wisdom is that biological agents are an unattractive weapon, in part because of the perceived risks involved in their production, and also because of the difficulty of targeting particular groups or populations. But this is not an area for complacency. A report commissioned last year by the U.S. Department of Defense highlights the “almost limitless list of malicious activities that could potentially be pursued with biology” and draws parallels with the importance of advances in physics and chemistry during the Cold War.

Read the article >>


GC Capital Ideas Covers Modeling Developments: GC Capital Ideas presents a review of our recent stories covering modeling for various perils.

Read the article >>


Affirmative Versus Silent Cyber: An Overview: While the current debate over “affirmative” versus “non-affirmative” coverage has been ongoing for a few years, WannaCry and Petya/NotPetya cyberattacks helped make the issue of “silent cyber” more critical. These two 2017 cyberattacks effectively shifted the conversation from data breach, notification costs and third-party liability to first-party liability insuring agreements due to the extent and expanse of the systematic, large-scale damages they triggered.

Read the article >>


And, you may have missed….

First Singapore Catastrophe Bond Sets Stage for ILS Expansion in Asia-Pacific: The first catastrophe bond has been issued out of Singapore. This highlights the potential of the insurance-linked securities (ILS) market in the region, and is aligned with the city-state’s efforts to establish itself as a global hub for Asian risk transfer. The bond is sponsored by Insurance Australia Group (IAG) as part of its 2019 catastrophe aggregate reinsurance cover and represents the first such transaction by the company.

Read the article >>


*Securities or investments, as applicable, are offered in the United States through GC Securities, a division of MMC Securities LLC, a US registered broker-dealer and member FINRA/NFA/SIPC. Main Office: 1166 Avenue of the Americas, New York, NY 10036. Phone: (212) 345-5000. Securities or investments, as applicable, are offered in the European Union by GC Securities, a division of MMC Securities (Europe) Ltd. (MMCSEL), which is authorized and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN. Reinsurance products are placed through qualified affiliates of Guy Carpenter & Company, LLC. MMC Securities LLC, MMC Securities (Europe) Ltd. and Guy Carpenter & Company, LLC are affiliates owned by Marsh & McLennan Companies. This communication is not intended as an offer to sell or a solicitation of any offer to buy any security, financial instrument, reinsurance or insurance product.