insurance companies management plans for natural hazards september, 2013
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Insurance Companies Management Plans for Natural Hazards
September, 2013
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Nat Cat Risk Map
Turkey Earthquake Risk Map
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Some Serious Events in 2011• New Zeland E/Q, Japan E/Q, Turkey E/Q
• ABD , Europe Snow Storm
• England , ABD Taphoon, Tornado
• Irene Hurricane
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Joplin Tornado Outbreak ~
$6.5B
Winter storms hit Midwest & Northeast
~ $1.0B
Birmingham Tornado Outbreak ~ $7.3B
Hurricane Irene ~ $4.3B
TX Wildfires ~ $.5B
A.M. Best places 6 Euro groups
"under review"
S&P warns of downgrades for 15 Euro nations
Snowstorm hits northeast
~ $.6B
10yr Treasury yield hits historical low
(1.72%)
S&P 500 down 19% from 2011
peak
S&P downgrades US
debt
Japan Earthquake and Tsunami
~ $23.5B
New Zealand Earthquake ~ $13.5B
Thailand Floods ~ $10B
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Largest Natural Catastrophes 1970-2011
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Insured Catastrophe Losses 1970- 2012
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One of the Biggest Natural Hazards in 2011 in Thailand Flood 12 Mia USD
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The Biggest Natural Hazards within last 20 years is Sand Hurricane in America more than 25 Mia USD in October 2012
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Natural Hazards Event Claims in Turkey
Egean Flood (2011 January)
Antalya Flood (2012 January)
Samsun Flood (2011 July)
Ordu Flood (2011 August)
Van Earthquake (2011 October)
Antalya Flood (2011 October)
İstanbul Storm (2012 April)
Due to Global Warming (Unexpected Flash Flood & Wind Storms) also because of Geological conditions of Turkey Earthquake events on top of this insufficient risk conditions has created heavy effect on insurance companies in last 18 Months.
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Catastrophic Events in 2012
Over 300 catastrophic events occurred in 2012 168 were natural catastrophes, while the remaining 150 events were man-made disasters
Total economic losses estimated at about USD 186 billion
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Catastrophic Events in 2012
At least nine events triggered losses of USD 1 billion or more; Hurricane Sandy was the most expensive at USD 35 billion.
%42 of Total Damage in Asia
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List of Major Losses in 2012 according to Loss Category
510
235
2012 Reinsurance ImpactsReinsurer Capital (USD Billions)
Insurer Capital
• Insurer capital increased 9 percent from year end 2011 to Q3 2012, back in line with historical averages for the industry.
• Reinsurance demand continues to be flat to down slightly in peak zones as capital increases and insurers continue to retain more risk.
• Reinsurer capital has continued to increase throughout the first 3 quarters of 2012 to a new peak level
• Supply continues exceed demand in most global regions
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-17% 18%
17%-3% 10%
1%12%
34%
-29%
9%
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Important Catastrophe Losses
2358Source: Munich Re 12
2358Source: Munich Re
Total Cat Protection in Turkish Insurance Sector since 2010
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Turkish Cat Protection Cots increase by %15
Total Cat Protection in Turkish Insurance Sector 6.47 Milyar Euro
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On the Other Hand Climate Change Is Happening and Natural Hazards on Increasing Trends
Potential increased frequency and severity of storms
Rising sea levels
Potential increased frequency and severity of drought
Natural resources stresses
Increased severe weather events•Flood•Hurricane winds•Ice Storms•Fires …
Earthqukaes
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Environmental Impacts
Drought
Flood
Extreme Rainfall
Storm
High Winds
Cold/Snow/Ice
Heat/SunFuel/Transport
Energy
Carb
on/G
reen
hous
e G
as e
mis
sion
s
Biod
iver
sity
Clea
n Ai
r/Po
lluta
nts
Serv
ice d
eliv
ery
Insu
ranc
e
Financia
l
Legal
Market changes/demands for services
People/health & Social care
Procurement
Planning
Water
Waste
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What is the Role of Insurance in Adaptation to and Mitigation of Climate Change Risk ?
History / Demonstrated Record of reducing risks- Exploration into emerging markets- Reduction of Fire Risk / Improvement of Existing Building Stock- Improvements to Worker Safety- Improvements to Vehicle / Driver Safety- Risk Mitigation in Deployment of New Technologies
Policy makers should engage insurance industry expertise and capital to most efficiently and effectively adapt to and mitigate risks of climate change and natural hazards
- After all … insurers are in the business of risk …
Risks: Failure to climate proof creates difficulties in securing investment and/or insurance cover Potential liabilities if climate change is not factored into long term decisions about the
futurePossible impacts: Insurance Policies: Check Insurers stance on undefended flood risks and impact on
premiums Future Developments: improved specification that takes account of future climate is likely
to be cost effective in most casesOpportunities/Controls/Mitigation Evidence of climate proofing enhances reputation with all stakeholders, provides security
for investments and an opportunity to reduced insurance premiums
Climate Change Risks and Opportunities
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The Role of Insurance Sector to Natural Hazards
ArrangementEmergency Plan,
Early Warning etc.
ArrangementEmergency Plan,
Early Warning etc.
Interaction with Policymakers
ADAPTATIONM
ITIG
ATIO
N
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Insurance Companies Natural Hazards Management
Increasing the Risk Awarness of the Risk
Maping of the Risks and Classfing and Pricing Models
Risk Assesment / Selection
Following the Technical Rules / Regulations / Precautions
Appropriate Scope of Wording and Clauses in accordance with the tariff and regulation in force
Monitor the Catasrophic Accumulation coming from the policies in the portfolio
Before Claim
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Insurance Companies Natural Hazards Management
Focused risk-management efforts include use of geographic information systems to better understand and pinpoint risks, land-use planning, flood control programmes, mitigation along coastlines, cloud seeding to divert hail storms, tightened zoning, improved weather forecasting and storm warning systems, and public spending on disaster preparedness and recovery
To buy eough Natural Catastroping Reinsurance Protection in paralel with the existing company cumulative sum insured
To Establish one additional data storage area in a different place far away the main buiilding where can not be impacted afetr teh same event
Creating Common Data Bank within the Market wshowing all existing insured details ( such a Tramer for motor business )
Before Claim
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Insurance Can Be Applied to Facilitate Mitigation & Adaptation to Climate Change Risk
Insurance focuses on risks to private assets
Insurance is the ultimate economic shock absorber
Insurers have also developed disaster preparedness and recovery plans, and participated in the formulation of building codes to make buildings more disaster resistant
Insurers are creating products today to facilitate adaptation and mitigation to climate change risk
Before Claim
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Insurance Companies Natural Hazards Management
Business Continuty Plan 1) Personal Safety* If hit by an natural hazards within office hours* If hit by an Natural Hazards after Office Hours
2)Fırst Aid and Building Safety
3) Partners and After Event Coomunication
4) Copamny – Staff First Commnunication After the Event
5) Situation Analysis and BCP Invacation
6) After event Actions – Coordination - Commnunication
After Claim
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Insurance Companies Natural Hazards Management
Prepare The Business Continuty plan and Pre Agrement with the Third Parties Claim Adjusters Car Reapirer Restoration Companies Suppliers ( Spare Parts ect ) Lawyers Ect.
Rough / Quick Estimation of the Size of the Natural Hazard
Decide and Establish Immediate Actions
Organize the Possible Risk Minimaze Actions
After Claim
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Insurance Companies Natural Hazards Management
Communication with Reinsurers Claims Notification Claim Handling Advanced Payment ect
Manage the Cash Flow
After Claim
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