Diapositive 1

FIAR 2012, SINAIA, ROMANIA

Session on Catastrophic Risks InsuranceNatural Catastrophe Risk ManagementExperiences and perspectives Roland NUSSBAUMManaging Director of Mission risques naturels (MRN), Paris, FRAFPCN Board, FR National DRR Platform

NSinaia, 22 MayPreamblesFormer presentations to the Romanian insurance market

What dit happen since 5 yrs?

FIAR

NSinaia, 22 MayAn association dedicated to NatCat risk knowledge and reduction, in partnership with public authorities,created in 2000 between:

Mission des socits dassurances pour la connaissance et la prvention des risques naturels

www.mrn.asso.frWhat is MRN ?

NSinaia, 22 May Permanent staff members: engineers, geoscientists, PhD students

Collaborative network of hundreds of correspondents :insurance companies State and local authorities Stakeholders and thematic associations

The MRN team

NSinaia, 22 MayActivities of the association

NSinaia, 22 MayGeoservicesStudiesExtractionCleaningInterpretingIntegrationData warehouseObservatoryTransactional and geographic DBProducts and servicesof general interest

AnalysesReportingMethodsModelsMonitoring, gathering, acquisitioninsurance undertakingsGENERIC (all risks)THEMATIC (risk specific)MRN GIS PlatformInsurance associations and public partners

NSinaia, 22 May

Areas subject to storm surge

Preliminary assessment of storm surge exposurenumber of property assets (personal and commercial lines / CRESTA zone)MRN asset exposure observatory

NSinaia, 22 May

A web based GIS tool to support insurance professionnals on the natural hazard exposure analysis for the sites of a commecial lines customer

MRN intranet geoservices infrastructure Users

NSinaia, 22 May

R.NUSSBAUMUse of MRN conventional hazard data sets at company level

Analysis of a commercial lines porfolio exposure to floods

NSinaia, 22 May

Natural Catastrophe Risk ManagementExperiences and perspectives

OUTLINENatCat Insurance Schemes in the EU

30 Yrs of French experience, Lessons learnt

Risk knowledge, a main PPP issue

Concluding remarks

NSinaia, 22 MaySource CEASource CEA+*+Insurance Schemes in Europesource : Insurance Europe*+Key:Optional CoverageCompulsory extended coverage:Recently put in placeIn projectMinimal role played by insurersColour intensity proportional to penetration rate of Natural Hazard coverageInsurance schemes widely vary across Member States due to:Different levels of risk exposureUnderestimation of risk (ie low risk perception)Lack of awareness aboutrisk preventionAnticipation of state aid or compensation

NSinaia, 22 May11The coverage of Natural events by both the insurance industry and the state varies widely. In Europe, four main categories are apparent:In some countries (like The Netherlands or Denmark), insurers play a minimal or optional role to that respect. The state organizes the insurance scheme through the government annual budget or through tax levied on fire damage policies which are managed by a specific fund.In other countries (like Belgium, France or Norway), the solution is a mix of compulsory insurance and of state intervention in case of damage. Similar schemes are currently considered by the public authorities in Italy and Romania. In most of the countries, the inclusion of such coverage in certain branches policies is compulsory whereas underwriting by policyholders is made on a voluntary basis.In Switzerland, the State does not intervene in the provision of insurance but makes the insurance of certain risks compulsory, most of the time by means of fire contract.Finally, the solution, which is the most widespread, is the case in which the states intervention is totally absent and most of the covers relating to natural hazard are optional. The rate of penetration of these covers varies according to the risk perception and to the effective risk exposure.The collaboration between the state and the insurance sector in several countries shows the need of public-private partnerships in the field of natural catastrophes in order safeguard insurability. These partnerships are complemented by reinsurance schemes, by co-insurance schemes, and other type of risk sharing such as the EU Solidarity fund.

The differences in the coverage may be reflected by the differences in risk exposure but other reasons can also explain these differences: underestimation or unawareness awareness of the size of the risk exposure and the anticipation of non-insurance compensation by for example the state or public. 1. NatCat Insurance and risk management: 30 Years of experience in France, as an exampleLoss recordsLessons learnt from a recent event: XynthiaAn integrated DRM schemeInsurance componentPrevention componentRisk basin strategies / governance towards sustainabilityLessons learnt and further developments

NSinaia, 22 MaysubsidenceSources : FFSA-GEMA (2011) & MEDDTL / BD GASPAR (2011)Author : MRN May 2011windstormsfloods1.1. Property damage losses caused by natural catastrophes in France

AFIR 6 Special Session I

NSinaia, 22 May13Sources : FFSA-GEMA (2011) & MEDDTL / BD GASPAR (2011)Author : MRN May 2012

AFIR 6 Special Session I1.1. Property damage losses caused by natural catastrophes in France

NSinaia, 22 MayCarte de rpartition par dpartement de la centaine dvnements complmentaires source BD GASPAR, SANDRE, traitements MRN

NSinaia, 22 May

1.2. XYNTHIA 28 February 2010

Winter storm and storm surge

NSinaia, 22 May16 1.2. Property damage lossesXynthia Event28 February 201053 fatalities and 79 injured people in France More than 2.5 bn of economic losses, out of which 1.5 bn insured lossesCoverTotal insured lossNb of ClaimsAverage costCATNAT(storm surge)0,75 bn 35 00021 000 Windstorm0,75 bn 435 0001 700

NSinaia, 22 May17171. NatCat Insurance and risk management: 30 Years of experience in France, as an example1.3. An integrated DRM legal and regulatory scheme

FIAR 2012

NSinaia, 22 May1.3. An integrated DRM scheme (1) Mapping environmental risks, according to insurability and associated insurance solutions in FranceStormHailSnowHurricaneEarthquakeVolcanicLandslideSubsidenceAvalancheFlood)AssurablilityCoverTGNCATNATCatTech Risks (law 21 July 03)Natural hazardsTechnological other environmental risksCatTECH IRD RIEnvironmental liability insurance ASSURPOL PoolDomino effectsEnvironmental liability (law 01 August 08) Mesurable deteriorations : Water Soils Protected Species and Habitats Mesurable impacts on their ecological services Forest FireThunder

NSinaia, 22 May

1.3. An integrated DRM legal scheme (2)NatCat 1982 law, revised 1995, 2003

NSinaia, 22 MayCompulsory extended coverage to property damage contract

Cover type, level of premium and basic deductible are the same for all insureds, adopted by law

Insurance-like business, excess of annual losses by direct insurers are topped at 100 % loss ratio on retention after 50% quota share

State operating as reinsurer of last resort, on top of CCR (State owned reinsurance company) both QS & annual stop loss reinsurance treaties

The cover (indemnity based, no limitation) is triggered by administrative recognition of natural catastrophe at the level of each affected municipality 1.3. Main features of NatCatinsurance schemeInsurance compoent

AFIR 6 Special Session I

NSinaia, 22 May1.4. Risk reduction incentiveswithin the CATNAT schemeRISK REDUCTION COMPONENT

AFIR 6 Special Session I

NSinaia, 22 MayCest le Bureau de tarification qui fixe les conditions dassurance.

Risk reduction incentiveswithin the CATNAT schemeRISK REDUCTION COMPONENT

AFIR 6 Special Session I

NSinaia, 22 MayRisk reduction incentiveswithin the CATNAT schemeRISK REDUCTION COMPONENT

AFIR 6 Special Session I

NSinaia, 22 MayA 12% levy on NatCat premium (150 Mio ) is financing a public Fund (Barnier Fund), dedicated to subsidize:At individual level (must be insured):Expropriation from highly exposed assetsFriendly acquisition of property if severely affectedVulnerability reduction measures within the limit of 40 % of total costs ( studies and works)At community level :PPRN studies (50 % of their costs)DRR structural and non structural measures taken by communities (PAPI, PSR), within the limits of 20 to 40 % of their total costsRisk awareness raising and insuruance information campaignsRisk reduction incentiveswithin the CATNAT schemeVolet prvention

NSinaia, 22 May1. NatCat Insurance and risk management: 30 Years of experience in France, as an example1.4. Risk basin strategies / governance towards sustainability

FIAR 2012

NSinaia, 22 MayRisk retention and transfer along LEP Curve(for floods under NatCat regime)

Without DRR measures at risk basin levelWith structural DRR measures at risk basin level

NSinaia, 22 MaySource : Stratgie damnagement lhorizon 2013 pour lutter contre les inondations sur le bassin de lOise, Entente Oise Aisne, 20091.4. Flood risk reduction strategyof a floodplain management authority (1)

NSinaia, 22 May1.4. Flood risk reduction strategyof a floodplain management authority (2)

Source : Stratgie damnagement lhorizon 2013 pour lutter contre les inondations sur le bassin de lOise, Entente Oise Aisne, 2009

NSinaia, 22 May1. NatCat Insurance and risk management: 30 Years of experience in France, as an example1.5. Lessons learnt and future developments

FIAR 2012

NSinaia, 22 May1.5.1. Lessons learntToo many events unavoided, Several significant events, but No extreme event in 30 yrsVery efficient/popular scheme, despite compulsory extensionDelayed DRR policies and measures, although recent significant improvements at all levels, but effects on average annual loss are a long term issue

FIAR

NSinaia, 22 May

NSinaia, 22 May32volution compare sinistralit catnat inondation et des PPRN inondations depuis 1982 en France mtropolitaine et DOM:

- cart entre nombre de PPR et nombre de communes ayant un PPR reflte la difficult lie lexploitation de la BD GASPAR ( Problme de rptition : PPR rvis, PPR multirisque inondation,)1.5.2. Future developmentsImplement risk knowledge, as major DRR governance decision making tool (see 2.), involving stakeholders as producers and/or end users Proposal of a law introduced last month, with the following main changes on FR NatCat scheme:Introduce objective recognition criteria for eventsAllow insurers to differentiate NatCat ratings for commercial linesRestricted conditions for subsidence coverage

FIAR

NSinaia, 22 May

2. Risk knowledge, a main PPP issue

NSinaia, 22 May2.1. Present situation of NatCat risk knowledge in FRPublic hazard data are a main input to insurance market, through MRN hazard / risk knowledge management tools :Observatories of public hazard data coverage, exposure, public prevention policies efficiencyServices to the insurance companiesLaunching of a National Observatory for Natural Risks (ONRN), as a main imput for DRR governance decision making, with public/private stakeholdersData sets coverage & quality evaluation, sharing & dissemination, Hazard/Risk mapping, open source modelling methodologies and decision making tools development & uses

NSinaia, 22 May35En sappuyant sur les donnes publiques de zonage des alas partout o elles sont disponibles, la MRN dploie aujourdhui, dans le domaine de la connaissance, des activits dintrt gnral professionnel, qui se traduisent par diverses formes de partenariat public priv:des activits caractre institutionnel, pour le compte de FFSA et GEMA: Lobservatoire MRN de lexposition aux aleas naturels des enjeux particuliers et professionnels, et diverses tudes en aval pour le compte de la profession,Un chantier dvaluation des politiques publiques de prvention, en commenant par les PPR, le but tant que la profession puisse exprimer aux pouvoirs publics son point de vue sur la pertinence et lefficacit, diffrentes chelles, de la politique publique de prvention, comme cela se pratique dans diffrents pays, notamment au Royaume Uni,Des tudes conjointes et partenariats avec les EPTB, notamment lEtablissement Public dAmnagement de la Meuse et de ses Affluents (EPAMA) et lEP Loire[1] (voir planches correspondantes de lexpos).Des activits au service des socits dassurance de la FFSA et du GEMA, essentiellement au titre dune infrastructure de goservices Intranet sur les alas naturels. Celle-ci est utile diffrents mtiers des socits dassurances pour mieux identifier, mieux connatre, mieux valuer, mieux conseiller, mieux indemniser, mieux souscrire, sur les diffrents segments de march, en priorit sur le segment des risques dentreprise. Il sagit de mettre la disposition des collaborateurs des socits des outils qui exploitent les donnes publiques de zonages dalas, pour laide lanalyse de lexposition dun site, comme dun ensemble de sites ou tout un portefeuille dassurance, par le tlchargement des donnes. Nous nous inscrivons rsolument dans le champ des directives europennes dfinissant:dune part les informations cartographiques produire dans le cadre dune politique de prvention des risques (directive Inondations en loccurrence) dautre part les conditions de leur diffusion aux parties prenantes (directive INSPIRE).A linstar de nos collgues des marchs allemand et autrichien, nous prparons lextension de loutil aux autres grandes catgories dalas relatives aux risques industriels et technologiques ou de responsabilit environnementale, y inclus les potentiels effets dominos, ce qui contribuera une plus grande sensibilisation des acteurs industriels aux diffrents risques et, dans le contexte du Grenelle de lenvironnement notamment en France, devrait tre associ une forme intressante de partenariat public priv.

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NSinaia, 22 May37Sample flood risk indicators (1)

NSinaia, 22 May37Sample flood risk indicators (2)

NSinaia, 22 May

Sample flood risk indicators (3)

NSinaia, 22 MayConcluding remarks

NSinaia, 22 MayTo summarize on DRM/DRR and related domains: legal/cooperation frames,at international, regional and national levels DomainUN scaleEU scaleFrench scalePrevention

HFA*Dir. Flods (2007)Dir. INSPIRE (2007)EUROCODES 8 & 20CCA & DRR StrategiesCodes (2003) environment, spatial planning, construction-habit.Civil ProtectionMDG HFA

IDRL (Intl Red Cross Red Crescent)Financial Instrument (2007)Communautary mechanism (2007)New civil protection law (2004)Economic resilience(incl. Risk transfer)

MDGHFA

IAISArt. 122.2 TreatyEUSF (2002)Dir. Solvency II (2009)

EIOPA / Cat TFCode envt: Fds Barnier

Insurance Code;: Insurance schemePrudential regulations(*) Hyogo Framework for Action and Millenium Development GoalsOther domains of UN conventions integrating NatCat prevention (by order of apperance) :Heritage, Human Rights, Cross border rivers and lakes, Alpine region, CCA

NSinaia, 22 MayTrend towards integrated DRM costs controlIs it an equilibrated country profile?

Source : PLANAT, 2007, Safety at which cost?

NSinaia, 22 MayConclusionMajor trends for NatCat insurance schemesIntegration of Risk Financing and Transfer within DRM at most governance levelsConvergence towards:Risk metrics methods, including LP-HI scenarios,Loss, exposure and DRR policy data shared at appropriate aggregation level,Holistic risk based approaches & decision making toolsRisk governance bodies involving stakeholders, all relevant scales Innovative risk transfer and public private partnerships to address these issues

NSinaia, 22 May

Wood sculpture of Atlas cedar tree,that was fallen by MARTIN Storm of 27/12/99roland.nussbaum@mrn.asso.frThank you for your attention

NSinaia, 22 MayGraph13744514

PreventionCrisis preparedness & managementR&DInsurances

Feuil1Cost of NatCat security in CHAssurances37R&D4Prvention45Prparation & gestion de crise14100Prvention = protection structurelle individuelle et collective et amangement y/s zonage rglementaire

Feuil10000

AssurancesR&D

Feuil2

Feuil3