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

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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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