Posts Tagged ‘Week in Review’



August 26th, 2016

Week’s Top Stories: August 20 - 26, 2016

Posted at 6:30 AM ET

Chart: Evolution of Market Price, Capacity, Limit for Terror Pools: Chart shows the evolution of international reinsurance market price, capacity and limit for terror pools from 2009 to 2014.

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Emerging Risks: Modeling Considerations Moving Forward: Technological progress is accelerating at a rapid pace and with it are the risks and opportunities that accompany those changes in many different segments of our economy.

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Chart: Percentage of Insured Versus Uninsured Natural Catastrophes (2000 To 2015): Chart shows the global percentage of insured natural catastrophe loss versus uninsured natural catastrophe loss for the period 2000 to 2015.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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Bluecut And Clayton Wildfires, California: The Bluecut and Clayton fires have caused significant impacts to affected areas and pose an ongoing serious threat to life and property. No serious injuries or deaths have been reported, however, the fires have destroyed multiple structures.

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And, You May Have Missed…

Tracking and Modeling New Integrated, Intricate Technology Risks: Casualty (re)insurers do not cover standalone emerging risks. A product defect (with recall) or a latent bodily injury resulting from new technological nano-products or Unmanned Aerial Systems risks, could lead to class action lawsuits and ultimately large liability claims including products liability as well as professional liability. This emergent reality, however, is difficult to address. A carrier would need to identify and model several possible epicenters of a liability chain reaction and follow their rapidly spreading implications throughout a portfolio.

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August 19th, 2016

Week’s Top Stories: August 13 - 19, 2016

Posted at 6:30 AM ET

Chart: Percentage of Insured Versus Uninsured Natural Catastrophes (2000 To 2015): Chart shows the global percentage of insured natural catastrophe loss versus uninsured natural catastrophe loss for the period 2000 to 2015.

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U.S. Northern Gulf Floods: In the U.S. Northern Gulf States, a significant and historic flood event has affected areas of southern Louisiana and Mississippi. Flood impacts have been particularly severe in areas of Baton Rouge and Hammond, Louisiana. Media reports indicate at least six fatalities, several thousand water rescues and at least 2,700 homes affected. It will take some time to fully assess the scope and severity of impacts of this event, and our thoughts are with those lost and directly affected by this event.

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Bluecut And Clayton Wildfires, California: The Bluecut and Clayton fires have caused significant impacts to affected areas and pose an ongoing serious threat to life and property. No serious injuries or deaths have been reported, however, the fires have destroyed multiple structures. Our first thoughts and concerns are with those directly affected by this event.

Read the article>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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And, You May Have Missed…

Gaining Optimum Value from ORSA: Own Risk and Solvency Assessment (ORSA) was first introduced as a regulatory requirement as a result of Solvency II. (Re)insurers would be wise to take note of the many similarities between Solvency II and the National Association of Insurance Commissioners’ (NAIC) ORSA and, where possible, avoid reinventing the wheel when trying to implement them. Now, and especially with the introduction of the Insurance Capital Standard (ICS), it is increasingly important for (re)insurers to avoid unnecessary, redundant and duplicative activity in the attainment of regulatory satisfaction by striving for a uniform framework to establish risk management and controls, corporate governance, transparency and disclosures across borders. In so doing, (re)insurers will gain optimum value from their ORSA.

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August 12th, 2016

Week’s Top Stories: August 6 - 12, 2016

Posted at 6:30 AM ET

Chart: Overall Losses and Insured Losses 1980 To 2014: Chart shows the widening gap between economic loss and insured loss for the period 1980 to 2014.

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Unmanned Aerial Systems/Drones: Growth projections for the drone or Unmanned Aerial Systems (UAS) sector are nothing short of phenomenal, as the opportunities and advantages afforded by using this type of machinery in construction, agriculture, energy/utilities, mining, real estate, news media, film production and public safety become increasingly more apparent each passing day. Nevertheless, the potential economic benefits are considered to be vast, expecting to generate an estimated economic benefit of USD82 billion along with 100,000 jobs by 2025.

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Developments in Europe: Changes in Reinsurance Decisions: Recently, we have seen a change in the way reinsurance is viewed in some companies and groups: The chief financial officer increasingly recognizes reinsurance as an instrument to achieve risk and capital management, rather than using capital measures like equity and sub-debt issuances.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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And, You May Have Missed…

Hurricane Earl: Hurricane Earl made landfall in Belize last Thursday, with final landfall as a tropical storm in Southeast Mexico over the weekend. Impacts have been rendered in Belize as a result of strong wind gusts, an impactful storm surge and heavy rainfall. Some damage to property and infrastructure has been reported, although the full scope and severity remain unclear. Significant rainfall has also affected areas of Southeast Mexico, with reports of destructive flooding, landslides and property damage. At least 42 have been reported dead in Southeast Mexico and another 2,000 have been displaced, according to media reports. The full extent of impacts from this event remains unclear as recovery and assessment efforts are still underway.

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August 5th, 2016

Week’s Top Stories: July 30 – August 5, 2016

Posted at 6:30 AM ET

Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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New Economics Are Creating New Medicine: Through the Affordable Care Act, many measures are being implemented that are expected to have a positive impact on bending the healthcare cost curve downward in the long term. However, the same act removed annual and lifetime limits for medical insurance claims. As a result, the maximum potential loss from a single individual is a new frontier of risk, with new heights being reached each year. This is both a frequency and severity issue.

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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.

Read the article>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


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

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And, You May Have Missed…

Rates That Reflect Risk: Insurance marketplaces that are stable and viable in the long-term succeed when insurers offer policies and coverages at premium rates that are appropriate and are subject to the requirements and standards of not being excessive, inadequate or unfairly discriminatory. At the same time, premium rates should be balanced and take past and prospective loss and expense experience into consideration. When these factors are not successfully accomplished, a public sector solution often emerges.

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July 29th, 2016

Week’s Top Stories: July 23 - 29, 2016

Posted at 6:30 AM ET

Nanotechnology: The Plastics of the 21st Century: Many scientists view nanotechnology as the revolutionary technology of the 21st century. Just as plastics were a pervasive and revolutionary product of the 20th century, nanotechnology products are having widespread use and change our lives in a myriad of ways. This technology has quickly evolved into a global force that is transforming manufacturing, medicine and an ever increasing number of consumer/food goods. The field has become a worldwide market worth an estimated USD 1 trillion and is projected to grow at a rate of 16.5 percent through 2020.

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Increasing External Demands Compel Companies to Improve Risk Management Disclosures: Guy Carpenter released its latest Enterprise Risk Management (ERM) Benchmark Review 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. Capital market, legislative, and regulatory influences, such as the approaching implementation of Solvency II, are expected to further compel company managements to better recognize and analyze the risks of their enterprises.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

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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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Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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And, You May Have Missed…

Earthquake Coverage In Japan: Japan is known for its earthquake potential; and like many other earthquake-prone countries, the government participates in insuring earthquake risk. For houses and residential buildings there are two major sources of earthquake insurance. One is via commercial non-life insurance companies with support from the government and the other is via cooperative insurers. For all buildings and man-made structures other than houses and residential buildings, earthquake insurance is available from commercial non-life insurance companies, albeit on a strictly controlled basis.

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July 22nd, 2016

Week’s Top Stories: July 16 - 22, 2016

Posted at 6:30 AM ET

Cyber Gaps in Traditional Insurance Products/Standalone Insurance Products: Although the insurance market has developed a dedicated product line that addresses the initial risks faced by companies, such as data breach and business interruption due to network failure, traditional insurance products in their design have not historically contemplated the exposure to protect against cyber risks. Companies can purchase cyber specific cover in the form of extensions to traditional policies or as standalone cyber policies.

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Evolution of Risk Capital: The continued flow of new capital into the (re)insurance industry constitutes the largest change to the sector’s capital structure in recent memory. New capital has entered the market through investments in insurance-linked securities (ILS) funds, sidecars, hedge fund-backed reinsurance companies and collateralized reinsurance vehicles. Investors have increasingly been attracted to low correlation returns from catastrophe risk relative to traditional capital markets risks and the attractive yield for the measured (re)insurance risk relative to other investments, particularly in the current low inflation, low yield era.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


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>>


And, You May Have Missed…

Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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July 15th, 2016

Week’s Top Stories: July 9 - 15, 2016

Posted at 6:30 AM ET

Super Typhoon Nepartak: Super Typhoon Nepartak made landfall on the southeast coast of Taiwan around 22 UTC on July 7, before final landfall as a tropical storm on Mainland China around 06 UTC on July 9. Nepartak has rendered significant flood impacts both in Taiwan and Mainland China according to media reports, with at least 10 and three dead in Mainland China and Taiwan, respectively. Flood impacts have been especially severe in Mainland China, which was affected by excessive monsoon rains just prior to Nepartak. Our first thoughts and concerns are with those lost and directly affected.

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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.

Read the article>>


Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

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.

Read the article>>


And, You May Have Missed…

Chart: Combined Ratio For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents combined ratio for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

Read the article>>


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July 8th, 2016

Week’s Top Stories: July 2 - 8, 2016

Posted at 6:30 AM ET

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>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


Stochastic-based BCAR: Do You Understand Your “Capital-print”?: Technology and innovation continue to change the world around us, creating both opportunities and new challenges for the (re)insurance industry. Advances in risk quantification such as predictive analytics and capital modeling, to name a few, are changing the way we underwrite, price and manage risk. Similarly, technology is allowing A.M. Best (Best’s) to advance the analytics of risk supporting its assessment of balance sheet strength. Taking advantage of stochastic modeling technology, the evaluation of risk within Best’s capital model is undergoing a fairly substantial overhaul to broaden the lens used to analyze risk relative to capital. The technology allows efficient production of multiple capital metrics adjusted for a range of risk levels rather than risk represented by just one data point, providing deeper insights into balance sheet strength, risk profile and risk appetite.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


Chart: Return On Premiums For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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And, You May Have Missed…

Partnerships: The Way To Public Sector Risk Financing: The impact that catastrophic loss can have on the fiscal position and tax base of government entities across the globe is significant. Impacted areas can take decades to recover when economic recovery is limited. Approximately 73 percent or USD 2.7 trillion of natural catastrophe losses globally between 1970 and 2014 were uninsured. The creation of private sector pre-financing options will not only relieve the burden on taxpayers and in turn, public finances, but will migrate the management of these catastrophes to insurance and reinsurance companies where claims handling and risk management is core to their operations. This allows local economies to come back on line more quickly.

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July 1st, 2016

Week’s Top Stories: June 25 – July 1, 2016

Posted at 6:30 AM ET

Chart: Return On Premiums For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on premiums for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

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Potential Losses From the Kumamoto Earthquake: The catastrophe modeling firm RMS estimated the economic loss for property risks to be between USD2.5 billion and USD3.5 billion. This estimate includes only residential, commercial, and industrial property and contents. Catastrophe modeling firm AIR estimated the insured loss to be between USD1.7 billion and USD2.9 billion for property risks. Both catastrophe modeling firms’ estimates exclude infrastructure, business interruption and contingent business interruption.

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Chart: Return On Equity For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents return on equity for the Guy Carpenter Global Reinsurance Composite, 2005 through first quarter 2016.

Read the article>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


And, You May Have Missed…

Closing the Protection Gap: We have identified seven preconditions essential in the movement towards resiliency and de-risking public sector exposure.

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June 24th, 2016

Week’s Top Stories: June 18 - 24, 2016

Posted at 6:30 AM ET

Potential Losses From the Kumamoto Earthquake: The catastrophe modeling firm RMS estimated the economic loss for property risks to be between USD2.5 billion and USD3.5 billion. This estimate includes only residential, commercial, and industrial property and contents. Catastrophe modeling firm AIR estimated the insured loss to be between USD1.7 billion and USD2.9 billion for property risks. Both catastrophe modeling firms’ estimates exclude infrastructure, business interruption and contingent business interruption.

Read the article>>


Chart: Source Of Earnings For Guy Carpenter Reinsurance Composite, Q1 2016: Chart presents source of earnings for the Guy Carpenter Global Reinsurance Composite for the first quarter, 2016 compared to the first quarter, 2015.

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Chart: Regional Property Catastrophe ROL Index, 1990 to 2016: The chart shows the indexes for United States, United Kingdom, Asia Pacific and Europe.

Read the article>>


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>>


Risk Profile, Appetite, and Tolerance: Fundamental Concepts in Risk Management and Reinsurance Effectiveness: Prior to the recent turbulence in the financial markets, insurers and reinsurers were increasing their use of enterprise risk management (ERM) to make risk and capital management decisions. While this was driven in part by rating agencies and regulators, many carriers began to recognize the value of metric-based frameworks and capital models in evaluating their portfolios.

Read the article>>


And, You May Have Missed…

Private Market Driven Innovations/Solutions: The 2015 Global Insurance Forum addressed the topic “Filling the Protection Gap.” During the conference, key speakers noted the growing divide between the economic losses societies are facing and the role of the insurance industry. Many (re)insurance leaders believe the industry can play a significant role in a rapidly changing global risk landscape with pre-loss financing solutions designed to spread risk, relieve the burden on public finances and improve the resiliency of communities.

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