The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of Guy Carpenter and City University of Hong Kong, today released its fourth annual report presenting the findings of the GCACIC’s research activities from the past year. The report details the findings of 22 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.

Continue reading…

Flood risk is poorly modeled at a global level, particularly in developing countries where flooding is a regular occurrence. 

Continue reading…

Guy Carpenter reports that dynamic capital growth and ample reinsurance capacity resulted in a relatively stable renewal at April 1, 2013. In a briefing released today, Guy Carpenter comments that the convergence of traditional and alternative capital sources is changing the marketplace, with non-traditional capacity now making up an estimated 14 percent of global property catastrophe limit.

Continue reading…

Floods are among the most destructive hazards and as more people move to urban areas, flooding is having a growing impact on larger populations and economic losses.

Continue reading…

Here we bring together recent GC Capital Ideas’ posts that have focused on the BRIC (Brazil, Russia, India and China) countries. 

Increased Flood Loss Potential:  Making use of all available tools and practicing comprehensive exposure management will both strengthen (re)insurers’ ERM practices and allow them to make informed risk management and reinsurance decisions as they enter new markets. Certainly, flood risk is prevalent and increasing in almost every developing economy.

Read the article >>

Lloyd’s: What Will Success Look Like?  If Lloyd’s is successful in achieving the growth and diversification outlined in its near-term and long-term strategic plans, it can expect to capitalize on business opportunities in emerging market economies such as the BRIC countries (Brazil, Russia, India and China). Growth, however, will not necessarily be limited to these markets. Other countries in Southeast Asia, Eastern Europe and Latin America are experiencing strong growth and increasing insurance penetration, and these territories also present attractive opportunities for Lloyd’s.

Read the article >>

Growth Potential in Developing Markets:  Positive premium growth trends in developing markets are expected to be sustained over the next decade. During this time, emerging markets are expected to drive global economic growth, and foreign direct investment in these emerging regions is likely to increase. In Brazil alone, investment in infrastructure is expected to amount to USD550 billion over the next few years as the country prepares to host the soccer World Cup in 2014 and the summer Olympics in 2016. China and India too are expected to continue to see robust growth in the next ten years.

Read the article >>

State of the Reinsurance Market, Part II: Inflation/Deflation Expectations, Investment Returns:  Expansionary monetary policy has fueled concerns that inflation could increase in the medium term, but the picture is less clear in the near term. While consumer price indices in Brazil, Russia, India and China (BRIC), the United States and the rest of the G7 currently exhibit positive trends, consensus forecasts show borderline disinflationary trends in the nearer term in the United States and many developed markets.

Read the article >>

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

Here we review the recent GC Capital Ideas stories that have dealt with supply chain risk. 

Contingent Business Interruption: Life Support for Industry:  the insurance industry contemplates the concept of supply chain risk, questioning whether it is a threat or an opportunity. The industry is undecided whether CBI coverage should be enthusiastically marketed as a positive differentiator or consigned to the “accommodation business” category. 

Read the article >>

Global Losses of 2011 Changed the Perception of Risk: Over the last few years, the global (re)insurance sector has seen significant increases in cold spot catastrophe losses. This growing trend refers to exposures in territories that have historically been considered non-peak zones and are unmodeled or inadequately modeled. It is also a by-product of the increasingly global economy in which (re)insurers operate and the growing demand for (re)insurance in emerging and developing territories.

Read the article >>

Thailand Flood 2011: Executive Summary: In 2011, Thailand experienced its worst flooding in years, leaving more than 800 people dead and causing severe damage across northern and central regions of the country. The floods, lasting a few months, severely damaged and disrupted manufacturing operations in Thailand.

Read the article >>

Guy Carpenter Asia Pacific Catastrophe Report 2012; Executive Summary: The Thai floods emphasized the need not only to understand asset concentrations better but also the fragility of global supply chains. Not only were these property damage losses modeled on a rudimentary basis if at all, but business interruption losses and supply chain disruption were completely unmodeled.

Read the article >>

Global Perils: The Tohoku earthquake/tsunami and the Thai floods revealed risks that (re)insurers had not previously considered, with CBI claims - resulting from supply chain failure - accounting for a large share of insured losses.

Read the article >>

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

Here we gather recent GC Capital Ideas posts that focus on flood risk and flood events in the Asia Pacific region. 

Floods in Eastern Australia:  Ex-tropical cyclone Oswald tracked over parts of Queensland and New South Wales in eastern Australia between January 23 and January 30, resulting in widespread damage from flooding, severe storms and tornadoes.

Read the article >>

Increased Flood Loss Potential: Making use of all available tools and practicing comprehensive exposure management will both strengthen (re)insurers’ ERM practices and allow them to make informed risk management and reinsurance decisions as they enter new markets. Certainly, flood risk is prevalent and increasing in almost every developing economy.

Read the article >>

Flood Risks in Emerging Markets: Despite such important model limitations for earthquakes, the lack of modeling solutions for flood risks poses an even greater threat to (re)insurers. As illustrated by Figure 7 below, flood risk is poorly modeled at a global level by the three main modeling companies, particularly in developing countries where flooding is a regular occurrence.

Read the article >>

Guy Carpenter Develops Database of Industrial Estates in China, Taiwan, Thailand and Indonesia: In 2011, Thailand experienced its worst flooding in years, which severely damaged and disrupted manufacturing operations in seven large industrial parks. Due in large part to the significant concentration of insured values in these parks, total insured loss from the 2011 flood is estimated to be in the range of USD15 to USD20 billion.

Read the article >>

Guy Carpenter Asia Pacific Catastrophe Report 2012; Executive Summary: At the time we were publishing our 2011 Asia Pacific Catastrophe report, there was a growing realization that losses from the Thai flooding ongoing at the time were going to be significant. The Thai flood losses came at the end of a run of losses in the Asia Pacific region that were large, unprecedented in recent times and possibly unexpected by many market participants.

Read the article >>

Thailand Flood 2011: Executive Summary:  In 2011, Thailand experienced its worst flooding in years, leaving more than 800 people dead and causing severe damage across northern and central regions of the country. The floods, lasting a few months, severely damaged and disrupted manufacturing operations in Thailand. Flooding also forced seven huge industrial estates in central regions to close, causing damage to the industrial sector in the billions of U.S. dollars.

Read the article >>

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

Event Summary

Ex-tropical cyclone Oswald tracked over parts of Queensland and New South Wales in eastern Australia between January 23 and January 30, resulting in widespread damage from flooding, severe storms and tornadoes. Floodwaters in some areas reached record levels, causing damage to thousands of properties and forcing widespread evacuations. A number of towns and cities were affected by severe flooding, including Brisbane, Ipswich, Bundaberg and Rockhampton. Bundaberg was particularly badly hit. The Insurance Council of Australia (ICA) has reported an estimated insured loss of AUD290 million (USD302 million) from the event as at 4pm on January 31. The 2013 flood event comes just two years after significant flooding hit Queensland in January 2011, which resulted in insured losses of around AUD2.4 billion (USD2.5 billion).

Continue reading…

GC Capital Ideas has published several stories recently on emerging markets and how pursuit of them may contribute to profitable growth. We highlight several of the articles here.

How Guy Carpenter Can Help: Catastrophe Risks in Developing Economies: Guy Carpenter is uniquely positioned to help clients successfully grow their business in emerging markets. Our GC Global Analytics and Advisory team offers services and solutions that include industry-leading risk analytics, strategic and technical advice and capital advisory.

Read the article >>

Increased Flood Loss Potential: Making use of all available tools and practicing comprehensive exposure management will both strengthen (re)insurers’ ERM practices and allow them to make informed risk management and reinsurance decisions as they enter new markets. Certainly, flood risk is prevalent and increasing in almost every developing economy. Recent studies by Swiss Re and the Organisation of Economic Co-operation and Development suggest flood loss potential will grow as emerging economies continue to prosper.

Read the article >>

Flood Risks in Emerging Markets: Despite such important model limitations for earthquakes, the lack of modeling solutions for flood risks poses an even greater threat to (re)insurers. As illustrated by Figure 7 below, flood risk is poorly modeled at a global level by the three main modeling companies, particularly in developing countries where flooding is a regular occurrence.

Read the article >>

Catastrophe Models: Implications of Emerging Market Growth on the (Re)insurance Sector: Natural disaster risk assessment relies on probabilistic catastrophe models and historical data. The three main catastrophe modeling companies, AIR Worldwide, EQECAT and Risk Management Solutions, have therefore traditionally created modeling solutions for perils and territories considered to be peak risks. Although each modeling company has in recent years launched products for countries outside the more established markets of the United States and Western Europe, several gaps in coverage remain, particularly in emerging markets.

Read the article >>

Implications of Emerging Market Growth: ERM: Although improvements in ERM practices meant (re)insurers were better prepared for the major catastrophes of 2010 and 2011 than those in 2005, the global nature of these losses has prompted some companies to review their perception of risk. This international loss trend, along with insurance growth in emerging market regions, is driving the need for better and more comprehensive tools for modeling risk.

Read the article >>

Click here to read additional stories about emerging markets >>

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

Guy Carpenter reports that the reinsurance sector enters 2013 equipped with ample dedicated capital and stable pricing. In its 2013 global renewal report, The Route to Profitable Growth, Guy Carpenter finds that the January 1, 2013 renewals took place against a stable backdrop, with only loss-affected lines and select regions experiencing price volatility. The market was supported by a combination of factors including lower than normal catastrophe losses during the first nine months of 2012, new reinsurance capacity and record-high levels of capital.

Continue reading…