Homeowners and residential real estate investors in US should be prepared to face a rise in property insurance rates according to real estate financing solution provider SitusAMC. The company in a recent white paper, ‘Weathering the Storm: Burgeoning Insurance Costs for Real Estate,’ said the impact of natural disasters on the residential property market has not been limited to California and Florida, where several high-profile disasters have taken place. In fact, in 2020, the states hardest hit by natural disasters were Texas, Virginia and South Dakota. Winter storms in Texas accounted for 40% of the total losses in the US property insurance market during the first half of 2021. The white paper reveals that the rise in the number and severity of hurricanes, wildfires, tornadoes and other events tied to climate change has created significant risk for insurance companies, which will lead to a rise in insurance premiums and reductions in coverage for property owners. SitusAMC vice president and head of thought leadership Jennifer Rasmussen said, "The growing number of climate events has left the insurance industry reeling. Many insurers and reinsurers have already seen their 2020 financials severely downgraded.” Dr Rasmussen said, “As the intensity and scope of future catastrophes grow, insurance rates for property owners will likely rise significantly in the near future." The white paper says recent demographic and migration trends are exacerbating the problem, as more people are moving to fire-prone and flood-prone areas in the west and southeast. Current migration trends will place an additional 1.2m homes at risk for flooding over the next 30 years, an increase of 10% from today according to data from First Street Foundation. As insurance premiums rise, many homeowners who cannot afford private market options may fall back on state-backed insurers of last resort which are available at steep discounts. However, this typically offers bare-bones policies that place property owners at increased risk for losses following a disaster. Dr Rasmussen said, "Most people may not be surprised to hear insurance rates are going up, but few understand how precarious the situation is for the insurance industry. As the number of climate-related disasters increase, many homeowners and residential real estate investors could be in for a rude awakening in the years ahead." Many insurance companies draw from reinsurance policies to protect themselves from natural catastrophes. However, the reinsurance industry has been experiencing losses for years, and is currently passing along cost increases to insurers, which will ultimately impact property owners, the white paper stated. Source: asiainsurancereview.com

As airports reopen and flights become available again, aircrafts face risks now more than ever. The COVID-19 restrictions on travel caused a detrimental decline on flying, which left majority of planes placed in prolonged storage. This extended storage resulted into causing crucial errors and dangerous malfunctions in plane engines and systems. Aside from manmade errors by out-of-practice pilots, both technical and mechanical problems can cause big issues for airline companies. Hence, today is the perfect time to glance and take a comprehensive look at aviation insurance. Aviation insurance provides coverage geared towards risks concerning commercial aircrafts and general aviation. But why the need of it? With an aviation insurance coverage, the aircraft, together with the passengers and the pilots, are ensured of a comprehensive cover should an unforeseen circumstance or hazard occur. These covers may include third party liability, property damage, cargo, and ground risks. Depending on the situation (or should you be a commercial owner, renter, or private owner and/or operator), insurance companies in the Philippines provide a wide range of products for your consideration. Specific and tailor-fit coverages are also offered, conditional to the airline’s circumstance, needs, or structure. Sources: https://www.bbc.com/news/business-55313504 https://www.oecd.org/daf/fin/insurance/4.DavidGasson-background.pdf https://www.bloomberg.com/news/features/2021-10-14/plane-crash-risks-rise-as-covid-19-leaves-airline-pilots-out-of-practice

The controlling shareholders of Syn Mun Kong Insurance are exploring the sale of a majority stake in the insurer and have picked several strategic players to advance into the next round of bidding, reported Bloomberg citing people familiar with the matter. The insurer is raising funds to improve its liquidity position in order to pay COVID-19 claims that have surged. Syn Mun Kong is working with an adviser on the deal, which could be valued at about $200m, they said. The sale could include a fresh investment of about $100m, they added. The Dusdeesurapot family led by chairman Reungvit Dusdeesurapot owned a 36% stake in the general insurer as of 27 May 2020, the company's annual report shows. The family held another 25% via Dusdeesurapot Holding Co. Liquidity enhancement Syn Mun Kong is one of three general insurers which have received the approval of the Office of Insurance Commission (OIC) to implement liquidity enhancement measures to improve their liquidity so as to be able to pay outstanding COVID insurance claims. The grace period is from 30 September 2021 to 30 June 2022. The other insurers are Thai Insurance and The One Insurance Public Company. Over at One Insurance, shareholders at an extraordinary general meeting yesterday did not agree to an increase of THB2bn in the capital of the insurer. The shareholders are reluctant to pump in money especially because of fears of a new wave of COVID-19 infections. The Omicron variant of the coronavirus is also a concern. The insurer could lose its operating licence if it were to fail to correct its capital position to meet COVID claims. Meanwhile, Thai Insurance plans to stop accepting new business in the first quarter of 2022 so as to avoid conflict of interests within the Thai Group Holdings stable following a sale of a stake in the insurer to a company within the group, according to a statement lodged with the Thai bourse. The first insurer that is a casualty of the COVID-19 crisis is Asia Insurance Company that was ordered in September 2021 by the OIC to suspend insurance sales. Separately, several insurers that have sold COVID-19 insurance policies are hoping that the OIC would allow them to revoke the policies. At least 10 of the insurers are listed on the Stock Exchange of Thailand, reported Nikkei Asia. They have reported a combined THB5.8bn loss for the third quarter through September. The insurance regulator had already in July this year rejected such a request. However, the OIC allows insurers to alter insurance coverage on a case-by-case basis if customers agree to the change. Scale of claims Thai General Insurance Association (TGIA) president Mr Anon Vangvasu has said that cumulative claims from the sale of COVID-19 policies since last year could reach THB40bn by the end of this year or 30% on average of their risk-based capital prepared for all types of general insurance. As of 15 November, he said, COVID-19 claims exceeded THB37bn while insurers’ risk-based capital stood at THB132bn, reported The Bangkok Post. Mr Anon added the percentage could reach an unsustainable level of 60%-70% in the event of a new wave. If that happens, 70m policies of other types of general insurance could be affected. He thus urged the OIC to allow insurers to cancel the COVID-19 policies. He says that COVID-19 is an emerging risk, with little data to support the accurate calculation of coverage and claims. Pricing was initially based on available data at the time. Source: asiainsurancereview.com

The insurance industry in Indonesia could develop more rapidly if the unhealthy competition in the credit insurance business line is immediately addressed. Mr Nurmadi Harsa Sumarta, an economic and business observer and an academic at Sebelas Maret University (UNS) made this comment, saying that cut-throat competition has resulted in lower premium rates and widened the gap between the risks faced and the premium value, according to a report by Antara News Agency. In 2020, credit insurance business experienced a fairly high surge in claims when the premium income actually decreased. The economic pressure due to the COVID-19 pandemic disrupted the ability of the public to repay loans, thus affecting the credit insurance business line. At present, credit insurance claims still have the potential to grow, considering that the threat of bad credit has not disappeared given that the economy has not fully recovered yet, Mr Nurmadi says. Aggravating the issue is the fact that governance and risk management in the credit insurance line are still inadequate. Mr Nurmadi said, "Fortunately, the risk can still be minimised through the relaxation of bank credit terms so that debtors are able to meet their obligations to creditors." He adds that insurers must always study their credit insurance portfolio and calculate the claims ratio. This needs to be done to ensure that the portfolio still provides positive underwriting results. State-owned insurance group IFG He gives an example of what the government did by forming the Indonesia Financial Group (IFG) as a holding company of state-owned non-bank financial institutions including insurers. IFG is able to ensure the consolidation and overall transformation of the financial health and sustainability of its subsidiaries, he says. IFG is tasked with ensuring that all subsidiaries implement good management and governance, as well as avoid competition for market share and price wars, and apply prudential principles in portfolio management. Mr Nurmadi said, "This includes strengthening the business climate, especially in credit insurance, as has just been done between PT Asuransi Kredit Indonesia (Askrindo), PT Credit Guarantee Indonesia (Jamkrindo), and PT Asuransi Jasa Indonesia (Jasindo)." The consolidation creates a healthy, sustainable and mutually beneficial credit insurance business for the parties involved. Source: asiainsurancereview.com

For those who haven’t registered yet, kindly click here.

Download the file.

As the world slowly returns to normal after the shock of the coronavirus pandemic, it’s time to take back all the lost time and all the moments. Businesses are undoubtedly going to be busier, and outdoor activities are going to be held again more often. We’re all returning to the people we were in 2019 – dynamic, bustling, and lively go-getters. The pandemic gave everybody time to reflect. And as we go out and return to normal, it’s time to also consider having an additional investment for the self, especially when it comes to prioritizing safety. Thankfully, insurance companies in the Philippines offer a wide range of personal accident insurance coverages. Personal Accident insurance, or PA insurance, provides the needed coverage when unexpected and injurious accidents occur. With the coverage, financial assistance and hospitalization benefits may be given and reimbursed, effectively cutting down hefty costs. All these, together with peace of mind, comes with being covered by PA insurance. Depending on your company of choice, lifestyle and needs, the following comprehensive packages are generally available: Individual PA, Family PA, Group PA, Auto Passenger PA, and Travel PA. General inclusions in PA policies may include coverage for accidental death, temporary and/or total and/or permanent disablement, and other medical expenses. Beneficiaries are paid on a lump sum basis, or by monthly income should it acts as a supplementary monthly income.

Your home is one of the greatest investments you will have in your lifetime. Not only does your home have sentimental value but more important, it also houses your crucial documents and most of your private assets as well. Unfortunate and unforeseen damages from fire accidents are unavoidable, but they are not always guaranteed to end up as final losses. How do you ensure that your home is protected and covered from direct loss, should perilous damages occur? Best for all your properties, there is only one answer: fire and property insurance. Fire insurance offered in the Philippines generally covers total or partial loss as a result of accidental fire and/or lightning. For an extended and more comprehensive insurance, optional coverages also include coverage for earthquakes, typhoons, floods, explosion from falling aircrafts, malicious damage, and robbery and burglary. These coverages help policy owners shoulder the hefty sums of rebuilding the physical premises of damaged homes or properties. It can be treated as a comfortable safety net - an investment which can be heavily relied on in times of damage and distress. Fire and property insurance also ensure peace of mind should the unanticipated occur. In a country like the Philippines, unexpected perils often happen, in the form of calamities. Is it not only natural that investments are also invested on, through coverage and protection?

A new project to develop climate-smart insurance for micro, small and medium-sized enterprises (MSMEs) in the Philippines will be put in place with the support of Asian Development Bank (ADB). It will be administered through the Asia-Pacific Climate Finance Fund (ACliFF). The climate-smart insurance project will be the first project under the Vulnerable Twenty Group’s (V20) new Sustainable Insurance Facility (SIF). The project will establish a viable and sustainable business case and model for climate and disaster insurance for the Philippines MSMEs. This will also explore solutions that address the gender-specific impacts of disasters affecting MSMEs. The programme outcomes will contribute toward the InsuResilience Global Partnership’s Vision 2025 target to cover 500m poor and vulnerable individuals against climate and disaster shocks by 2025. MSMEs remain underserved and in some instances, unreached by insurance markets, leaving them highly vulnerable to climate and disaster shocks. ADB sustainable development and climate change department director general Bruno Carrasco said, “Supporting the climate and disaster resilience of MSMEs not only supports the resilience of the overall economy but indeed the business owners, employees and the communities they serve, many of whom are vulnerable and also low-income sections themselves.” ACliFF is a multi-donor trust fund managed by ADB. It was established with the financial support from the Government of Germany’s Federal Ministry of Economic Cooperation and Development, whose funding will support the climate-smart insurance programme. Government of Germany’s federal ministry of economic cooperation and development director general Jürgen Zattler said, “Small enterprises frequently lack access to effective risk management tools, such as climate risk insurance, to protect against climate and disaster shocks. Dr Zattler said, “Promoting insurance access and adoption among small enterprises provides financial protection that helps to safeguard development gains and avoid reliance on adverse and less effective coping mechanisms.” Addressing the impacts of extreme weather events is one of four priority areas for the financial risk management products supported by ACliFF. The fund will also explore future collaboration with the V20’s SIF in other countries of Asia and the Pacific. Source: asiainsurancereview.com

There are uncertainties in climate models and its data output, but there is mounting evidence that points to more frequent or intense heavy rainfall episodes in some regions across Asia and Europe, said Aon in its latest report. The real-time climate change report, published last week, explored three recent examples of perils that show the fingerprints of climate change: Tropical cyclones, floods in Europe and Asia and wildfires in the US. In the past decade alone, weather-related disasters have resulted in nearly $3tn in economic damage. This accounts for 85% of total natural peril losses. These losses include direct impacts from such perils as tropical cyclones, flooding, and wildfires - all of which are demonstrating changing behaviour that is putting more lives, livelihoods and property at risk. Aon estimated that only 31% of these losses have been covered by insurance. Weather-related costs are expected to rise further as events become more frequent or intense, people continue to move into attractive, yet vulnerable areas and the price of daily life becomes more expensive. Higher temperatures, more rain One of the core principles of atmospheric science is that warmer air can hold more moisture. As the world has continued to warm at an accelerating rate in recent decades, this has also coincided with more extreme precipitation and subsequent flood events. Two highly anomalous 2021 flood events occurred in Western Europe and Asia. In both instances, the local insurance industry in Germany and China cited the highest natural disaster event pay-outs on record. There was an historic volume of rainfall that fell in Zhengzhou, China (Henan Province) in mid-July, there was even more focus on the significant protection gap which exists in the country. On 20 July alone, Zhengzhou recorded 612.9mm of rain. This compares to its total annual average rainfall of 640.8mm. Catastrophic flooding occurred that led to more than 552,000 insurance claims being filed. Despite the local Henan insurance industry citing a record $1.9bn in insured loss from the event – the costliest weather event on record for Chinese insurers – it still represented less than 10% of the overall economic loss. In the same month, across some parts of Germany and elsewhere in western and central Europe, nearly two times the annual July rainfall average fell in a 72 to 96-hour period that overwhelmed many rivers and streams. There has been vigorous discussion regarding the role of climate change in both events, said Aon. The tremendous volume of rainfall that occurred was consistent with what scientific research continues to highlight as expected with warming in the oceans and atmosphere. Warmer temperatures act as an accelerant to the evaporation process – often over the oceans or other large bodies of water – then place more water/moisture into the atmosphere. Actions must be taken One important step to communicate rainfall and flood risk is via return periods – or how likely such an event is expected to occur. For example: A 100-year event means there is a 1% chance of such an event occurring at a location in any given year. It does not mean that it will be another 100 years until another such event happens again. The increased influence of climate change suggests that what is considered a one-in-100-year event today may becoming a one-in-75 or one-in-50-year event in the future. An understanding of this likely shift in event occurrence frequency is highly important when developing risk mitigation and adaptation plans. Such analysis will only enhance the essential need for more regularly updated flood mapping and flood risk tools. Source: asiainsurancereview.com