There are encouraging signs that the natural catastrophe protection gap in Asia can be bridged, owing to factors such as relaxation of market access restriction in the region as well as the power of technology.
Speaking at the 16th Conference on Catastrophe Insurance in Asia in Singapore yesterday, Swiss Re’s Head of P&C Underwriting Sharon Ooi listed four promising signs to close the protection gap in the region.
Firstly, the overall liberalisation in (re)insurance regulations in the region has allowed for increased participation in the insurance market.
Secondly, there exists stronger support for data-sharing in various jurisdictions.
Thirdly, regional collaborative efforts are in place that can facilitate higher penetration of insurance; while lastly, the ability to leverage on technology allows for greater efficiency and convenience in terms of distribution, underwriting, policy servicing and claims.
However, Ms Ooi added that insurers would need to canvass the support of governments and regulators to help bridge the protection gap.
Asia saw US$31bn of economic losses due to natural catastrophes in 2017, of which US$26bn were uninsured.
Models facilitate markets
The availability of models is an important aspect in insuring against natural catastophes, and Mr Hemant Nagpal, Director, Model Product Management at RMS spoke of his organisation’s efforts to ensure the robustness of its models in the region.
For example in Japan, RMS most recently released a high-definition Japan earthquake and tsunami model, incorporating key research advancements on recent earthquakes to have hit the country. It has also incorporated a fully probabilistic tsunami model, thus providing a comprehensive view of earthquake risk for Japan.
Making climate change a boardroom issue
Meanwhile, insurers can do even more to make managing climate change a board room issue, said Mr Shitalkumar Khandar, Regional Catastrophe Leader at AIG.
He suggested five key takeaways to make boards more engaged with mitigating climate change.
Firstly is the need to articulate the threat of climate change and align it with the long-term success of the business.
Secondly is to illustrate the scope of the issue in terms of possible events and durations and how that may impact on business strategy.
Thirdly, it involves the need to uphold best market practices as part of a socially responsible and ethical organisation, while the fourth and fifth points relate to the uncertainties as well as the risk and opportunities of climate change and its impact on business operations.
Day 1 of the conference was chaired by Ms Christine Ziehmann, Vice-President of RMS. The conference ends today.
The 16th Conference on Catastrophe Insurance in Asia is organised by Asia Insurance Review and sponsored by RMS.