An increasing number of (re)insurers are therefore adopting comprehensive climate change strategies to recognize the potential impact on their businesses. Investing in solutions that help predict the likely effects of global warming on the location, intensity and cost of weather-related catastrophes is critical to acquiring a better understanding of climate change risk.
Posts Tagged ‘nat cat’
Although there has been a significant increase in both economic and insured losses from natural catastrophes in recent decades, it is important to put these numbers in context. With the exception of coastal flood, inland flood and drought, the wholesale attribution of rising financial losses to an increase in hazard frequency can be misleading. Statements concerning the influence of global warming on loss trends would be better served if normalized by factors such as inflation, (per capita) gross domestic product, total insured value, population density and annualized property value. Indeed, the IPCC agrees that ignoring these factors leaves an upward trend in losses for purely economic reasons, notwithstanding any behavior in the peril. As an example, the recent “trend” in hurricane losses for the coastal United States loses clarity when normalized by inflation and population density. (1)
Our first thoughts and concerns are with those lost or recovering from the exceptionally severe impacts of Super Typhoon Haiyan. Haiyan is among the strongest tropical cyclones ever recorded, and meets or surpasses the strongest landfalling tropical cyclone in recorded history. Haiyan made landfall in the Philippines on November 8 near Guiuan, with estimated 1-minute wind speeds of 185-195 mph (300-315 km/hr). A second landfall occurred on November 10 as a minimal Typhoon near the Vietnam-China border.
Super Typhoon Haiyan meets or surpasses the record of the strongest landfalling tropical cyclone in recorded history, and is among the strongest ever recorded. Haiyan made landfall during the early morning hours of November 8 near Guiuan, with estimated 1-minute wind speeds of 185-195 mph (300-315 km/hr). While it is still too early to fully assess impacts to the area, severe to complete wind damage is a near certainty adjacent to the storm track, with wave battering and water velocity damage most severe within 20 miles (32 km) of the storm track.
Guy Carpenter Extends Coverage of Industrial Park Database to Include Vietnam, Malaysia and South Korea
In 2011, Thailand experienced its worst flooding in years with insured losses estimated at around USD15 billion,(1) of which the Thai General Insurance Association attributed more than 90 percent arising from commercial risks located within industrial parks. As industrial parks are common in several countries in the region, Guy Carpenter developed a database of digitized boundaries of these parks to support its clients’ ability to analyze the potential for catastrophic losses arising from exposures located within park boundaries.
The Tohoku rupture of 2011 changed the market’s understanding of seismic risk in Japan. The Mw 9.0 event occurred in an area where earthquakes of up to only Mw 8.4 were thought possible. Following the event there was increased publicity surrounding the so-called Tokyo Fragment theory and discussion around the potentially increased probability of earthquakes near Tokyo.
Richard Banyard, Senior Vice President, Lance Finley, Managing Director, Jane Furnas, Senior Vice President and Scott VanKoughnett, Senior Vice President
Insurance policies are carefully drafted to outline coverage that is needed by policyholders while also specifying those areas where coverage is not expected to apply - the goal is to provide contract certainty, not in the usual sense of timeliness of contract signing, but from the perspective of specific policy language. Sometimes, however, contract certainty is not so certain. Recent examples have shown that insurers are increasingly facing reinterpretations of their policies by the judicial system, regulators, politicians and even the public via social media, all exerting pressure on insurers to provide coverage not previously anticipated by the drafters and underwriters of those policies. As these claims are presented to the reinsurance market, pressure is also put on reinsurers to provide coverage that they may not have originally contemplated. Insurers need to know that their reinsurers partner with them in such situations, and that reinsurance contracts provide appropriate flexibility to help ensure the reinsurers’ promise to pay. The comments made in this article are intended solely to foster discussion on this topic.
Guillermo Franco, Head of Catastrophe Risk Research - EMEA
It seems reasonable to expect a degree of uncertainty in catastrophe model results. It is not uncommon, however, for models to produce results that differ by several factors. In order to assess how much of this uncertainty is epistemic, due to our incomplete knowledge of the physical phenomena involved, this existing uncertainty needs to be quantified.
Guy Carpenter hosted “Transferring Risk - Is the Insurance and Reinsurance Industry Adequately Servings its Clients?” the Reinsurance Symposium held in Baden-Baden on October 20, 2013. The event explored a range of topics including: the gap between economic and insured losses; how new capital entering the market can move beyond property catastrophe; and measures to provide coverage for new and emerging risks.