May 10th, 2017

Guy Carpenter Hosts International Forum: Building Sustainable Flood Insurance Solutions

Posted at 10:30 PM ET

Guy Carpenter & Company hosted an international forum entitled “Building sustainable flood insurance solutions” in Berlin on May 9-10. The event brought together leading figures from science and academia, non-governmental organizations and the (re)insurance industry to examine the rapidly growing impact of flooding and explore measures to significantly reduce that impact.

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May 10th, 2017

Insurtech in China: Revolutionizing the Insurance Industry: Part III: Risks and Uncertainties Facing the Insurtech Industry

Posted at 1:00 AM ET

cliff-sheng-portrait-sm3Cliff Sheng, Partner and Head of Financial Services, Greater China, Oliver Wyman

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Notwithstanding the tremendous scope and opportunity for certain simple products — such as travel insurance and shipping return insurance — in the Chinese insurtech market, several products such as auto insurance and universal life insurance face uncertainties owing to the following four factors:

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May 9th, 2017

Insurtech in China: Revolutionizing the Insurance Industry: Part II: Insurtech Makes Gains

Posted at 1:00 AM ET

cliff-sheng-portrait-sm1Cliff Sheng, Partner and Head of Financial Services, Greater China, Oliver Wyman

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Insurtech is revolutionizing the insurance industry by bringing disruptive products and services to a market that is fast adopting, and increasingly moving toward, an online ecosystem. The market is also seeing a surge in the number of people who are aware of and are starting to understand the benefits of insurance.

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May 8th, 2017

Insurtech in China: Revolutionizing the Insurance Industry: Part I

Posted at 1:00 AM ET

cliff-sheng-portrait-smCliff Sheng, Partner and Head of Financial Services, Greater China, Oliver Wyman

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China’s capital markets aren’t yet mature enough to support financial innovation; meanwhile, existing state-owned financial institutions are not reforming quickly enough. This gap in supply has provided opportunities for Chinese fintech players — who are being supported by rapidly growing online ecosystems and a tech-savvy population — in diverse fields ranging from investing to payments.

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May 5th, 2017

Week’s Top Stories: April 29 — May 5, 2017

Posted at 6:30 AM ET

Chart: Combined Ratio for Guy Carpenter Reinsurance Composite, YE 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2016.

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The Insurance of Things & Industry 4.0 - A Matrix View: Technological progress and the accumulation of assets have not only stimulated the development of insurance products; they have in turn been nurtured by the availability of these offerings.

Read the article>>


Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

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Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals: Guy Carpenter & Company reports the decline in reinsurance pricing moderated at the January 1, 2017 renewal across most classes of business and geographies, as compared to the past three renewal seasons.  Several sectors experienced increased loss activity, which had only a localized impact on pricing while capacity remained plentiful. After remaining fairly stable in 2015, dedicated reinsurance capital increased by 5 percent from January 1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M. Best. The convergence capital segment increased by 10 percent.

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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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And, You May Have Missed…

Solvency II Equivalence in the International (Re)insurance Landscape: The concept of equivalence under Solvency II determines to what extent (re)insurance entities outside Europe can operate within the European Union (EU) while relying solely on their local solvency standards. The ability to operate in the EU is a significant issue that impacts multinational (re)insurance companies and groups.

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May 4th, 2017

Midwestern United States Flood/SCS Event, April 28 – May 4

Posted at 2:36 PM ET

gen-significant-flood-april-28-may-4-sm

A significant severe thunderstorm outbreak with heavy rainfall has affected areas from the Southern Plains to the Great Lakes and Northeast, with historic flooding in parts of the Central Mississippi Valley. Significant rainfall amounts of over ten inches occurred over saturated soils of the Central Mississippi Valley and surrounding watersheds. The rainfall produced historic flooding on some rivers, and the Mississippi River itself is expected to approach record flood stage at Cape Girardeau over the coming days. Flood impacts have been locally severe and include reports of property damage, numerous road closures, evacuations and water rescues. A levee breach has forced evacuations near Pocahontas, Arkansas.

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May 4th, 2017

GC Capital Ideas Top Stories: First Quarter 2017

Posted at 1:00 AM ET

1. Chart: Solvency II Ratios as of End of H1 2016: Chart presents (re)insurers’ Solvency II ratios compiled by Guy Carpenter for the first half of 2016. Many companies publish their solvency ratios without being required to do so, and some others actually specify target solvency ratio ranges as part of their risk appetite and financial targets. Solvency ratios are another metric for investors to use when assessing the relative financial strength of companies - and (re)insurance buyers can do the same when assessing counterparty risk.

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2. Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals: Guy Carpenter & Company reports the decline in reinsurance pricing moderated at the January 1, 2017 renewal across most classes of business and geographies, as compared to the past three renewal seasons.  Several sectors experienced increased loss activity, which had only a localized impact on pricing while capacity remained plentiful. After remaining fairly stable in 2015, dedicated reinsurance capital increased by 5 percent from January 1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M. Best. The convergence capital segment increased by 10 percent.

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3. Chart: Top Ten Significant Insured Loss Events: 2016: The table lists the latest estimates for the top ten significant insured loss events for 2016.

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4. 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>>


5. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


6. Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review in 2014, 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.

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7. Global Risks Report 2017: The Global Risks Report 2017, produced by the World Economic Forum with support from Marsh & McLennan Companies and other partners, was published. Now in its twelfth edition, the report provides insights into the key global risks facing businesses as well as the collective view of risk experts in all sectors as to the most significant threats to global prosperity over the next decade. The Global Risks Report 2017 will inform discussions at the World Economic Forum’s annual meeting in Davos, Switzerland.

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8. Disruptive Forces Redefining the Role of Insurance: Fundamental disruptive forces are driving monumental changes in the global economy at an unprecedented rate. These forces compel the (re)insurance industry to adjust to the new reality and capitalize on the opportunities created.

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9. Further Considerations on the Hurricane “Shield” Theory: A New York Times article titled “Conditions That Form More Hurricanes Also Protect U.S., Study Finds” notes a hurricane “shield” for the U.S. coast during busy hurricane seasons. The article, based on recent research by James Kossin, provides valuable insight, including some notes of caution from other experts in the field, but the observations should be treated with a moment of pause.

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10. Solvency II Equivalence in the International (Re)insurance Landscape: The concept of equivalence under Solvency II determines to what extent (re)insurance entities outside Europe can operate within the European Union (EU) while relying solely on their local solvency standards. The ability to operate in the EU is a significant issue that impacts multinational (re)insurance companies and groups.

Read the article>>


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May 3rd, 2017

Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, YE 2016

Posted at 1:00 AM ET

Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2016.

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May 2nd, 2017

Chart: Return On Premiums For Guy Carpenter Reinsurance Composite, YE 2016

Posted at 1:00 AM ET

Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through year-end 2016.

Continue reading…

May 1st, 2017

GC Capital Ideas Top Stories: April, 2017

Posted at 1:00 AM ET

1.  The Insurance of Things & Industry 4.0 - A Matrix View: Technological progress and the accumulation of assets have not only stimulated the development of insurance products; they have in turn been nurtured by the availability of these offerings.

Read the article>>


2. Measuring Cyber Aggregation Risk: Cyber risk is now an embedded feature of the global risk landscape, and preventative risk management and post-event remediation are gaining importance as shareholders, customers, supply chain partners, and regulators are increasingly focused on how companies are managing for cyber risks. Insurance is becoming an important piece of the strategy for helping businesses address these risks.

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3. Analytics: Fueling Risk-Informed Decisions: Today’s rapidly changing global environment presents insurers with many challenges and opportunities as capital management and risk transfer techniques evolve at an unprecedented pace. Stakeholders, regulators and ratings agencies are deepening their focus on risk management practices, and revolutionary developments in technology, including the Internet of Things and hyper-connectivity, are driving companies to adapt to the challenges that senior management faces to support risk management decisions material to their business.

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4. 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>>


5. Assessing Insurers in a Period of Rapid Change: Insurance Equity Analyst Survey 2016: Guy Carpenter has collaborated with Mercer to survey insurance equity analysts to understand the possible objectives and aspirations of insurance company shareholders. Incorporating or at least considering the views of various stakeholders will be critical for insurers in ensuring that they are moving along the right path, especially in this uncertain environment.

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6. Chart: Source of Earnings for Guy Carpenter Reinsurance Composite, YE 2016: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for year-end 2016 compared to year-end 2015.

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7. Guy Carpenter Reports Moderating Reinsurance Pricing Decline at January 1, 2017 Renewals: Guy Carpenter & Company reports the decline in reinsurance pricing moderated at the January 1, 2017 renewal across most classes of business and geographies, as compared to the past three renewal seasons.  Several sectors experienced increased loss activity, which had only a localized impact on pricing while capacity remained plentiful. After remaining fairly stable in 2015, dedicated reinsurance capital increased by 5 percent from January 1, 2016 to January 1, 2017 as calculated by Guy Carpenter and A.M. Best. The convergence capital segment increased by 10 percent.

Read the article>>


8. Public-Private Insurance Partnerships Bolster Latin American/Caribbean Resilience: Globally, three of the ten most costly natural disaster events in the last 35 years occurred in total or in part in the Latin America/Caribbean (LAC) region; losses from Hurricane Matthew in the Caribbean are still being assessed.

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9. Managing Catastrophe Model Uncertainty, Issues and Challenges: Here we repeat our series authored by John Major, which focuses on the issues and challenges in managing catastrophe model uncertainty.

Read the article>>


10. Public Sector Risk Financing Perspectives in Europe/Middle East/Africa: On a global basis, approximately 70 percent of the economic loss caused by natural catastrophe events is not covered by insurance. This gap, the cost of uninsured events, frequently falls on governments through disaster relief, welfare payments and infrastructure repair and rebuilding. The ultimate cost of these responses causes a strain on public balance sheets and an increase in public debt, ultimately burdening taxpayers. The protection gap is increasing in emerging economies especially where the amount of natural catastrophe economic loss covered by insurance dropped from 25 percent in 2002 to approximately eight percent in 2014.

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