Guy Carpenter today published a new report highlighting the continued increase in 2014 of total Asia Pacific catastrophe limit purchased. However, a confluence of factors, including the weakening of some key zone currencies has meant that reinsurance premium spend in the region has declined significantly.
Posts Tagged ‘typhoons’
Here we review recent GC Capital Ideas stories focused on climate change.
Guy Carpenter Asia-Pacific Climate Impact Centre Publishes New Annual Report: The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.
Third U.S. Climate Report Is Available: The White House released the Third U.S. National Climate Assessment report on May 6, 2014. The report was constructed with input of many U.S. scientists and coordinated by a cross section of U.S. interests including the energy sector.
Responding to Climate Change: It is vital for (re)insurers to consider how climate change could impact future losses. Global warming potentially poses a serious financial threat to the insurance industry with implications for catastrophe risk perception, pricing and modeling assumptions.
Climate Change: A Look into the Future: Global climate models project a best estimate of a further two to four degree (Celsius) increase in the mean temperature of the Earth by the end of this century. Although this may seem insignificant on an intuitive level, the resulting impacts are of significant concern. Sea-level rise is the most significant threat for coastal areas as a result of melting glaciers. Apart from this threat, changing weather patterns will result in drought and inland flood threats for some areas.
Global Warming: Adaptation Measures: The IPCC publications represent scientific consensus among many of the world’s top scientists (and scientific consensus is difficult to achieve). Their findings are generally consistent with the broader scientific literature.
Global Warming: Losses: Economic losses resulting from natural disasters increased from USD75.5 billion in the 1960s to USD659.9 billion in the 1990s (IPCC AR4, 2007 - Working Group II, Section 22.214.171.124). Insured losses have also increased, and “the dominant signal is of significant increase in the values of exposure” (IPCC AR4, 2007 - Working Group II, Section 126.96.36.199). Furthermore, the IPCC states that “failure to adjust for time-variant economic factors yields loss amounts that are not directly comparable and a pronounced upward trend for purely economic reasons.”
The Guy Carpenter Asia-Pacific Climate Impact Centre (GCACIC), a joint initiative of the City University of Hong Kong and Guy Carpenter, today released its fifth annual report presenting the highlights of the GCACIC’s research activities from the past year. The report details the findings of 16 projects conducted by the GCACIC, which focus on climate problems in the Asia-Pacific region as well as on a global scale.
2013 provided a respite for the (re)insurance industry following above-average losses in 2011 and 2012, with insured losses from natural catastrophes and man-made disasters estimated at around USD40 billion, according to Guy Carpenter & Company (see Figure 1). This is considerably less than the ten-year average loss of approximately USD60 billion and well below the most significant years of 2005 and 2011 (see Figure 2 (Inflation adjusted)). This can be partly attributed to the unusually quiet 2013 Atlantic tropical season. About 47 percent of insured losses in 2013 were reported in the Americas, 31 percent in Europe and 20 percent in Asia and Australasia (see Figure 3).
Guy Carpenter & Company released its 2013 Catastrophe Review, which shows that natural catastrophes and man-made disasters in 2013 resulted in insured losses of approximately $40 billion. Following above-average losses experienced in 2011 and 2012, 2013 provided a respite for the (re)insurance industry as insured losses were considerably less than the ten-year average of approximately $60 billion.
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.
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.
The 2012 renewal presented potential difficulties for all participants. Losses in Thailand and the after-effects of the March 2011 Tohoku earthquake combined with a hardening trend in the wider reinsurance market. The result was a complex renewal season for Japanese cedents. Careful planning by insurers and their brokers ensured that capacity was secured. But, capacity was secured at increased prices for excess of loss covers and with tightened terms and conditions in many lines.
Tropical Cyclones in 2010
For the second year running, no significant insured loss arose from global tropical cyclones. The 2010 hurricane season in the Atlantic was notable for its above-average activity and negligible impact on (re)insurers’ bottom lines, while typhoon development in the West Pacific was the lowest on record. These trends were driven by the development of a moderate La Niña event and very warm tropical Atlantic seas surface temperatures.
Johnny Chan, Dean, School of Energy and Environment, and Director, Guy Carpenter Asia-Pacific Climate Impact Centre City University of Hong Kong
Particularly since the devastation of New Orleans caused by Hurricane Katrina in 2005, many people believe that global warming could lead to more frequent occurrences of intense hurricanes like Katrina. This conclusion seems to be intuitively obvious. Global warming not only leads to increases in air temperature, but the ocean temperatures will rise as well. A warmer ocean will cause more evaporation of ocean water into the atmosphere. The energy that is absorbed by the water molecules going into the atmosphere will subsequently be released through condensation of the water vapor. Because tropical cyclones (called typhoons in Asia and hurricanes in the Atlantic) are huge cloud systems over the ocean, more evaporation, and subsequently more condensation, means that more energy is available for the tropical cyclones to develop. Thus, it seems obvious that under a global warming scenario, not only should the frequency of occurrence of tropical cyclones increase, but they should also become more intense.