Posts Tagged ‘Week in Review’



June 21st, 2019

Week’s Top Stories: June 15 - 21, 2019

Posted at 10:00 AM ET

2019 Terrorism Risk Insurance Report: Terrorism remains a dynamic global risk and a serious threat for people and organizations. The evolution of terrorism risk exposes many countries to complex threats from both international and home-grown groups, as well as individuals acting on their own, known as “lone wolves.” And the evolution of terrorism risk in recent years challenges risk professionals to adopt new strategies to protect properties, employees and balance sheets.

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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.

Read the article >>


Seasonal North Atlantic Hurricane Outlook: Seasonal outlooks generally call for a near-normal hurricane season, relative to the 1981-2010 average. The 2019 season comes after an active 2018 season with 15 named storms, including significant impacts from Hurricanes Florence and Michael. While the traditional hurricane season begins June 1 in the North Atlantic Basin, Subtropical Storm Andrea made a brief appearance roughly two weeks before the start of the season. We have seen early beginnings to a hurricane season before, and 2019 is the fifth consecutive year with a named storm before June 1.

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As We Enter the Era of the Ecosystem Economy, Are We Prepared for the Risks? We are entering the era of the ecosystem economy, in which complex networks of companies across industries collaborate to provide seamless experiences for customers. The economic opportunity of operating in an ecosystem is sizable and unprecedented - but so are the risks.

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Sir Richard Dearlove plays down Brexit but warns insurers of risks posed by “new international order”; MMC Young Professionals’ Global Forum 2019: The impact of Brexit on the London insurance market will be minimal, according to Sir Richard Dearlove, OBE, Non-executive Chairman of Ascot Underwriting, describing Brexit as “a sideshow.” Addressing delegates at the MMC Rising Professionals Global Forum, Mr. Dearlove said: “The London insurance industry is a global industry, not a European industry, so the effect of Brexit will probably be very small.”

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And, you may have missed….

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 >>


Click here for additional insights from Guy Carpenter >>

June 14th, 2019

Week’s Top Stories: June 8 - 14, 2019

Posted at 10:00 AM ET

Healthcare Organizations and Medical Risk: What HCOs Need to Know About the Medical Risks They Own: As healthcare organizations transition their business models from “fee for service” to “fee for value,” margin pressure, capital allocation and expense management are pitfalls to a successful transition. We argue that the creation of an integrated risk strategy framework to think about medical risk collectively (the medical risk continuum) will empower healthcare organizations to manage this transition more effectively and ultimately lower healthcare claim risk costs.

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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.

Read the article >>

John Neal: Lloyd’s must seize “once in a generation” opportunity to embrace digital transformation: The Lloyd’s market must evolve and evolve fast or risk driving itself into irrelevance. This was the warning from Lloyd’s chief executive Mr. John Neal as he addressed delegates at the 2019 MMC Rising Professionals’ Global Forum in London today.

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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 >>

Finding the Elusive Cyber Loss Curve Can Pay Big Dividends for Financial Institutions: What is the likelihood that your organization will experience a material cyber event in the next 12 months? Is the risk greater than 50 percent? Less than 25 percent? These questions are ever-present on the minds of risk managers, who long for at least a practical - if not precise - answer.

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.

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Click here for additional Guy Carpenter insights >>

June 7th, 2019

Week’s Top Stories: June 1 - 7, 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. The insurance industry of today is already highly complex. However, this complexity is only likely to increase as business models evolve, the speed of change regarding data and technology accelerates and the risks that the industry faces change and expand. For many organizations, the risk function’s ability to keep pace with these changes will be a defining factor in their survival and success.

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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 >>


Modeling Insights: Here we review recent GC Capital Ideas posts covering insights on modeling.

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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.

Read the article >>


The 2019 Captive Landscape: The number of organizations and risk professionals embracing captives as a tool to secure their future continues to grow, according to Marsh’s 2019 Captive Landscape report.

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And, you may have missed….

Global Insurance Pricing Rises in First Quarter of 2019: Average insurance pricing in the first quarter of 2019 in the United States increased by 1.1 percent, year over year. Property pricing increased 4 percent and has now increased each quarter since the fourth quarter of 2017, a period marked by catastrophe losses that included an above-average North American hurricane season. Large, multilayered property programs (those with gross written premium greater than USD 1 million) led the pricing increases, up nearly 7 percent.

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Click here for more insights from Guy Carpenter >>

May 31st, 2019

Week’s Top Stories: May 25 - 31, 2019

Posted at 10:00 AM ET

Global Insurance Pricing Rises in First Quarter of 2019: Average insurance pricing in the first quarter of 2019 in the United States increased by 1.1 percent, year over year. Property pricing increased 4 percent and has now increased each quarter since the fourth quarter of 2017, a period marked by catastrophe losses that included an above-average North American hurricane season. Large, multilayered property programs (those with gross written premium greater than USD 1 million) led the pricing increases, up nearly 7 percent.

Read the article >>


How Will Gene Therapy Change the Health Insurance Landscape? Gene therapy is a new kind of specialty medical treatment. A patient receives a one-time injection of DNA-filled viruses, and those viruses get to work changing the way a patient’s cells react. So far, three gene therapy treatments have been approved by the U.S. Food and Drug Administration: two are CAR T-cell immunotherapy treatments used for fighting leukemia, and one treats a hereditary blindness condition. Gene therapy is now considered an experimental treatment. If it enters the standard of care, payers may be faced with a whole new universe of high-cost claims.

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From Risk To Strategy: Embracing The Technology Shift: Technological change and digitalization can help risk functions in Asia Pacific increase their efficiency and effectiveness, but this will require new skills at an individual level, a supportive organizational environment and a well-managed transformation program.

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Finding the Elusive Cyber Loss Curve Can Pay Big Dividends for Financial Institutions: What is the likelihood that your organization will experience a material cyber event in the next 12 months? Is the risk greater than 50 percent? Less than 25 percent? These questions are ever-present on the minds of risk managers, who long for at least a practical - if not precise - answer.

Read the article >>


What Is the Future of Alternatives to Traditional Insurance Markets? There’s been much discussion in risk finance circles over the past decade about alternatives to traditional insurance markets. Much of the focus has been on the provider side - the pension funds, sovereign wealth funds and other investors that provide the capital behind so-called alternative risk transfer (ART) solutions.

Read the article >>


And, you may have missed….

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. In the United Kingdom, the Prudential Regulation Authority (PRA) is now asking (re)insurers to develop a silent cyber action plan by the end of the first half of 2019 and will conduct deep-dives on select firms in the second half to assess how they are meeting expectations described in a 2017 supervisory statement. It will then further assess affirmative cyber risk via an exploratory stress test later this year.

Read the article >>


Click here to receive more insights from Guy Carpenter >>

May 24th, 2019

Week’s Top Stories: May 18 - 24, 2019

Posted at 10:00 AM ET

Finding the Elusive Cyber Loss Curve Can Pay Big Dividends for Financial Institutions: What is the likelihood that your organization will experience a material cyber event in the next 12 months? Is the risk greater than 50 percent? Less than 25 percent? These questions are ever-present on the minds of risk managers, who long for at least a practical - if not precise - answer. Cyber risks are among the most serious perils facing the financial industry. Cybercrime is not only increasing in frequency, but also in magnitude, costing the world an estimated USD 600 billion, or 0.8 percent of global gross domestic product, according to a recent report published by McAfee and the Center for Strategic and International Studies. But while financial institutions have become practiced at estimating most operational risks and using this data to develop risk capital strategies, they often perceive roadblocks to extending these methods to cyber.

Read the article >>


What Is the Future of Alternatives to Traditional Insurance Markets? There’s been much discussion in risk finance circles over the past decade about alternatives to traditional insurance markets. Much of the focus has been on the provider side - the pension funds, sovereign wealth funds and other investors that provide the capital behind so-called alternative risk transfer (ART) solutions.

Read the article >>


Preparing For a Cyber Attack: Cybersecurity in many organizations has over the last few years been exposed as kind of a Swiss cheese solution, as cyber criminals have found vulnerable entry points to pull off major hacks costing companies hundreds of millions of dollars. In countless cases, companies have failed to erect strong defenses, or failed to recognize and quickly react to an attack. Clearly, cybersecurity needs to be elevated to the top levels of risk-mitigation strategy, alongside currency risk, natural disaster and terrorist attacks.

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. In the United Kingdom, the Prudential Regulation Authority (PRA) is now asking (re)insurers to develop a silent cyber action plan by the end of the first half of 2019 and will conduct deep-dives on select firms in the second half to assess how they are meeting expectations described in a 2017 supervisory statement. It will then further assess affirmative cyber risk via an exploratory stress test later this year.

Read the article >>


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 >>


And, you may have missed….

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.

Read the article >>


Click here for more insights from Guy Carpenter >>

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.

Read the article >>


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.

Read the article >>


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.

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. 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.

Read the article >>


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 >>


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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.

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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 >>


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