Insurance capacity to cover natural disasters is adequately available in ASEAN, despite the region's considerable natural catastrophe exposure. This was stated by Mr Henner Alms, partner at Faber Consulting, who was quoting comments from insurance executives in the region for the ASEAN Insurance Pulse 2021” report, released yesterday by Malaysian Re. Mr Alms, one of the authors of the report, also said that although Nat CAT risks have increased, improved modelling capabilities have allowed ASEAN insurers to allocate their capacity more efficiently. Among the various types of natural disasters, floods have been responsible for more than 45% of accumulated total Nat CAT losses of $137bn since 1990 in ASEAN – well ahead of other hazards such as storms or earthquakes, says the report. Notwithstanding the region’s considerable natural catastrophe exposure, the executives interviewed for this year’s ASEAN Insurance Pulse regard all types of flood risk as insurable in principle. However, insurance penetration remains low and, in particular, the lower income sections of society which are most exposed to the risk rely mostly on government support. "We are seeing an increasing demand for natural catastrophe cover in the ASEAN region," said Mr Zainudin Ishak, president and CEO of Malaysian Re. "Climate change is impacting peoples’ risk perception. They realise that weather patterns are different than in the past, sea levels are rising, coastal flooding increases or that the monsoon season seems to have shifted. While insurable assets have increased as well, clients seek protection from natural hazards. However, the lower income sections of society remain largely uninsured." The ASEAN Insurance Pulse is an annual research publication by Malaysian Re, now in its fifth year. This year's edition focuses on natural catastrophes and flooding. Climate change and urbanisation are expected to further aggravate the frequency and severity of floods and inundations. The impact from heavy monsoon rains is often amplified by drainage systems that are incapable of handling masses of water. The findings of this year's report are based on structured interviews with executives representing 27 regional and international (re)insurance companies, intermediaries, policymakers and trade associations. The interviews were conducted by Faber Consulting, a Zurich-based research, communication and business development consultancy, from August to September 2021. Demand The report says that demand for natural catastrophe protection is high. Customers are aware that they live in a nat CAT-exposed region. The main buyers are commercial entities, while the private sector remains largely underinsured. Across ASEAN, natural catastrophe protection for the private sector is limited due to the low insurance penetration. The cost of insurance and the willingness or ability to pay are the most decisive factors for the purchase of natural catastrophe coverage in the ASEAN insurance markets. Clients are highly cost conscious with a short-lived memory for past losses. Weak enforcement of building codes, flood zones or settlement restrictions also affects insurance demand and risk appetite in the ASEAN markets. On the supply side key challenges are the limited technical capacity in markets with a high natural catastrophe exposure. In addition, the ability to adequately model natural catastrophe risks is still perceived as insufficient. According to the executives interviewed, ASEAN governments are expected to take a more active role in protecting the lower income groups through premium subsidies and public private partnerships. Recommendations range from the introduction of mandatory insurance schemes to improving awareness and education about insurance products or to creating insurance pools and sharing the risks across as many shoulders as possible. The insurability of flooding in the AESAN markets also benefits from sufficient availability of primary insurance and reinsurance capacity at stable rates. Source: asiainsurancereview.com

A new cooperative insurance company shall be allowed to carry out insurance business and be licensed as such if it has a paid-up capital of at least 50% of what is required under the Amended lnsurance Code and subsequent amendments thereto, says the insurance regulator in a circular. The Insurance Commission (IC) notes that currently, the Amended lnsurance Code does not expressly provide for the minimum paid-up capital and the minimum net worth requirements for cooperative insurance companies. It published the circular because “there is a need to clarify the provision of the Amended lnsurance Code insofar as the minimum paid-up capital and minimum net worth requirements for insurance cooperatives are concerned”. The circular took effect from the date of its publication, which was 19 October 2021. Prior to the clarification, the regulations required an insurance cooperative to have a minimum paid-up capitalisation of at least PHP125m ($2.46m). However, the IC says that the requirements on capitalisation may be liberally modified "but in no case may the requirements be reduced to less than half of those provided by rules, regulations, or laws". The IC's circular also says that a new cooperative insurance company's minimum paid-up capital must remain unimpaired but shall subsequently follow the minimum net worth requirement for existing cooperative insurance companies for the continuance of the license. Existing cooperative insurers The IC says that for an existing cooperative insurance company, the minimum net worth shall be as shown in the schedule below: Source: asiainsurancereview.com

Non-life insurance companies shall be allowed to provide agriculture insurance. independently or in collaboration with the Philippine Crop lnsurance Corporation (PCIC), the government agency mandated by law to provide crop insurance to small farmers, says the Insurance Commission (IC) in a circular to general insurers and insurance intermediaries which takes effect immediately. General insurers can also collaborate on agriculture insurance with domestic and international public and private-sector insurers, reinsurers, technology providers and multilateral agencies. At present, agriculture insurance in the country is mostly provided by the PCIC which provides multi-peril crop insurance, which covers losses due to weather, natural calamities, pests and diseases, for various types of agricultural commodities (e.g. rice, corn, high-value commercial crops, livestock and fishery). The circular notes that the insurance penetration rate among farmers is low, ranging at only 8-14% for rice and only 2-6% for corn for the years from 2013 to 2017. Explaining its decision to open up agriculture insurance, the IC says that the development and availability of new technology platforms enable private insurers to more accurately determine the risks associated with agriculture and improve cost efficiency in the delivery of agriculture insurance to farmers located in remote areas. At the same time, the PCIC is willing to share relevant data and information, as well as to provide and share capacity with private insurance companies that would like to provide agriculture insurance, The IC says that private insurance companies recognise and consider the agriculture sector as a new and potential market. Their increased capitalisation enables them to cover catastrophic risks that are usually present in agriculture production and related activities. Non-life insurance companies can apply to participate in a regulatory sandbox to pilot their agriculture insurance offerings. The regulatory sandbox will run for five years to assess how the entry of the private sector in agricultural insurance will affect the sector’s performance and stakeholders. The sandbox is renewable at the option of the lC. Government subsidies received by the PCIC amounted to PHP28.6bn ($564m) in the past two decades, according to Finance Secretary Carlos Dominguez. As the new PCIC board chairman, Dominguez wants the PCIC to work with the private sector in insuring the crops of farmers, as he intends to reduce the agency’s reliance on state subsidies. Definition of agriculture insurance The circular says that "agriculture insurance" shall refer to the insurance of the produce of or assets used in cultivation of crops (i.e. grains, cereals and other crops as well as fruits and vegetables), livestock (i.e. dairy, cattle, hog and beef), rearing, animal husbandry, poultry farming, dairy farming and fisheries including all value chain activities like production, transportation. storage processing, packaging, preservation and marketing. Any insurance product already classified under existing categories of insurance, eg. flre, marine. engineering, shall be excluded from the definition. Source: asiainsurancereview.com

Labor economist Lawrence Katz looks at ‘Great Resignation’ and where it might lead During the earliest months of the pandemic, employers couldn’t downsize fast enough. Millions were laid off, executives took symbolic pay cuts and ordered wage and hiring freezes, and many economists predicted a grim year ahead for workers hoping to just get their old jobs back, never mind get ahead. Eighteen months later, U.S. employers are struggling to fill 10 million jobs and many of those same workers are looking at the offerings and saying, “No, thanks.” Since April of this year, Americans have quit their jobs and not returned to the workforce at a historic rate, an exodus some call “The Great Resignation.” According to the latest U.S. Bureau of Labor report, 4.3 million quit their jobs in August, 242,000 more than in July. The monthly quit rate hit a new high, at 2.9 percent. Though quitting is happening across all job sectors and among workers at all skill levels, it was up in August in hospitality and food services, wholesale trade, and in state and local education. Lawrence Katz, the Elisabeth Allison Professor of Economics at Harvard, is a labor economist who analyzes earnings inequality and the effect that education has on living standards. Katz spoke to the Gazette about why this is happening and whether it could represent a major power shift between workers and employers. Interview was edited for clarity and length. Q&A Lawrence Katz GAZETTE: What’s going on? Have we seen anything like this before? KATZ: We haven’t seen a quit rate this high since 2000, when the U.S. Bureau of Labor Statistics began the current Job Openings and Labor Survey data series. Last month was the highest quit rate that we’ve observed in the JOLTS data. There’s a monthly survey of a random sample of employers in the U.S. They’re asked, “In the last month, how many workers who were working here last month are no longer working,” and they’re asked the reason. There are three reasons. A worker can voluntarily quit. They can be laid off or fired. And there’s a smaller miscellaneous category called other separations, which is largely announced retirements. Historically, people are much more willing to quit their jobs when there are a lot of job openings. And what we’re seeing is a record level of job openings. Employers are looking for a lot of people to fill jobs and we clearly see in the data that expenditures by consumers, for a wide range of consumption products, are very, very high. People delayed a lot of consumption during the pandemic. So, there’s huge demand. We’re also seeing inflation take off a bit with shortages in these areas. A large number of workers lost their jobs in the pandemic and some are hesitant to come back to the labor market. We also have disruptions to the supply of temporary and seasonal workers through increased restrictions on immigration and work visas. And when there are a lot of outside opportunities, people are much more willing to take a chance on leaving their current job. GAZETTE: So these “quitters” are not simply retiring and they’re not just job-hopping. Are they between jobs or are they done with the rat race entirely? KATZ: The quitters are not really leaving the workforce. What happened is a lot of people lost their jobs early in the pandemic and a lot of them have not come back, especially when they haven’t had the opportunity to come back to their previous jobs. What’s puzzling, relative to the historical data, is the slow movement of people who have been unemployed for a while back into employment, given how many job openings there are. The number of people who switch from one job to another is what you would predict given the great opportunities. It’s always been true that people who switch jobs tend to get higher wage growth than people who stay put, but it looks unusually high right now — about 2 percentage points over the last. So, there are very strong economic incentives to change jobs — that’s the first reason. But a second issue — we see a lot of anecdotal and survey data on this — is, I think we’ve really met a once-in-a-generation “take this job and shove it” moment. GAZETTE: What’s driving that? KATZ: There’s no perfect way of measuring these types of factors. But what we do see is a lot of people asking about getting remote work, for example, and a lot of people questioning low-wage, high-turnover situations, and employers starting to respond, but pretty slowly relative to the expectations of workers. The other reason why this is a “take this job and shove it” moment for a lot of workers is their financial situation is much better than it was coming out of the Great Recession, with the expansion of the social safety net and the stimulus payments during the pandemic period. Upper­-middle-class and well-off people are doing quite well with the stock market boom and have saved a lot. But even people in the bottom two quartiles of the income and wealth distribution are in much better financial situations than in previous economic recoveries, so we’ve seen a slow return from unemployment given the job openings. Having a stronger safety net and having built up some savings means people can put more weight on their caregiving responsibilities, or can look for something better. They can invest in a training or another program that they might not have been able to do in the past. Whether this is a temporary phenomenon or whether this is truly a once-in-a-generation change in labor activism is an open question. But the number of strikes we’re seeing and workers willing to protest, whether it’s Hollywood production crew workers, John Deere employees, or Harvard graduate students, is very high relative to where the unemployment rate is at. So, I think there may be something more persistent here. “I think we’ve really met a once-in-a-generation ‘take this job and shove it’ moment.” GAZETTE: Costs for necessities like food, shelter, and cars are still going up. Does that put any pressure on employers to raise wages to retain workers, particularly with the hiring gap in the background? KATZ: I think the combination of the high inflation with the fact that workers have a lot of outside options and are a little better off financially will put pressure on employers to raise wages to keep workers. Jumps in inflation always put a little pressure to keep the real value of things, but that by itself wouldn’t be strong enough. It’s the combination of a tight labor market with that. And workers really will need substantial wage increases to keep up with inflation. These are quite unprecedented times in the whole range of the pandemic-related health situation and disruption and the temporary inflation. There’s not a good historical record to look at this one. We haven’t had a jump in inflation like this in decades, and we’ve never had one, in our living memory, related to pandemic shortages. GAZETTE: Are we in a reset period, where employees and employers are reassessing the terms of engagement? KATZ: Yes. I think a lot of employers are surprised at how many workers have balked at coming back to the office, the restaurant, or other workplaces. What I don’t know is whether employers can hold out and try to restore the pre-pandemic bargain more favorable to employers than to workers. The longer people stay out of work, the more their finances will go down, and they’re not going to get stimulus checks again. Maybe workers can hold out for six months and then the world will go back to the way it was before the pandemic. Or maybe the current moment reflects a permanent change in people’s values and a change in their willingness to withhold labor supply, individually and collectively. We’ve also been seeing a spurt in union organizing successes for a wide range of professional and technical workers over the last couple years and into the pandemic at places like the Urban Institute, MDRC, and the Brookings Institution, where the employers have voluntarily recognized staff unions. Using collective clout to improve pay and working conditions may be an increasingly important way for workers to make progress in the labor market. That could be a major change in the balance. A lot of it is individual decisions, but a lot of it is workers acting collectively now in a way that we haven’t seen in decades. Source: news.harvard.edu

The Covid-19 pandemic has made many Filipinos aware of their need for insurance protection. Now, the country’s insurance providers believe it is time to convince Filipinos to make insurance a priority. Lawyer Francisco M. Nob, president of the Philippine Insurers Club, said it is high time that Filipinos recognize insurance as a priority in their spending, especially for those that are at risk both for health and losing properties from accidents and natural calamities. Lawyer Francisco M. Nob, president of the Philippine Insurers Club “We Filipinos are becoming more conscious of our need for insurance, particularly health insurance, because of this pandemic. But the question is: Is insurance a part of our priorities as a people? It is in this area where we need to campaign more -- to make insurance a priority,” he said. Nob made this pronouncement as the country’s insurance industry celebrates this year’s Insurance Consciousness Week, a national event that highlights the value of insurance. He encouraged insurance companies to ride the wave of awareness that the pandemic has caused for insurance by retooling their products and making them more affordable and accessible to Filipinos. “Microinsurance is one way of doing this by offering insurance protection in sachet form; small coverages and affordable premium” he said. “TOUCH POINTS” Nob, who is Head of Claims Department of COCOGEN Insurance, Inc, also encouraged insurance providers to develop new “touch points” to make insurance more tangible to customers. “Usually, the major touch points a company has with its clients is when first, when you send an insurance quote, second is when you issue the policy and receive the premium, and the third would be through renewal “kasi hindi naman lahat may claim,” he explained. He went on to say that those with claims usually comprise a smaller percentage of the clients. And the larger percentage would not be able to experience the real value and importance of their insurance policy because they happen to have no claim. "The challenge is how to increase the touch points with those in the larger group to make them feel that insurance is a significant element of their existence as an individual or as a business owner? Yun ang hamon sa ating lahat,” he said. VLOGGING CONTEST Meanwhile, to engage employees of all insurance-related companies in the Insurance Consciousness Week, the PIC in cooperation with the Philippine Insurers and Reinsurers Association (PIRA) and the Insurance Commission (IC) is launching a Vlogging Competition. The competition is open to all employees of all companies related to insurance -- insurance providers, brokers, agents, adjusters, and even those working for PIRA, the IC and life insurance companies. Those who wish to join should produce a video with a maximum length of 2 minutes and upload it to the Phil Insurers Club The Official page on Facebook not later than October 31, 2021. The top three videos will win P20,000, P10,000 and P5,000, respectively. Winners will be known within November 2021.

Are you prepared against the growing threat of cyber-crimes? Are you holding valuable data that cyber criminals are eager to steal? Do you have a comprehensive plan that ensures that you can hold on to valuable resources and data over time? The bad news is, the likelihood of hackers invading your system is real. The good news, however, is that there are ways to guard against them. The digital space is a battleground, and data is one of the most important assets that a company has. There has been a constant and prominent rise in hacking and cyber-security breaches in the past few years. These attacks are increasingly becoming more advanced and dangerous. The question is, how far can you protect your data? Are you ready to take on the future of security? When it comes to cyber-security, you don’t want to take any chances. Join us on October 23, 2021, a joint partnership with Digital Pilipinas, SECUNA and Philippine Coding Camp to talk about Cyber Security. Register here.

The COVID-19 pandemic has led to a stronger interest in insurance, with three-fourths of Filipinos surveyed by AIA Group agreeing that insurance has become more important than ever for protection in case of unexpected incidents. AIA's “Save Smarter Study 2021” finds that more than a quarter (27%) of the 800 Filipinos polled say they plan to increase their allocation of funds to insurance. Of those planning to raise spending on insurance, 80% intend to spend more on life insurance and 60% say they plan to spend more on medical and health insurance. Source: asiainsurancereview.com

The Financial Stability Coordination Council (FSCC) has been formally established following the recent signing by President Rodrigo Duterte of an executive order. The FSCC is an interagency council composed of the Insurance Commission, the Bangko Sentral ng Pilipinas (BSP), the Department of Finance, the Securities and Exchange Commission, and Philippine Deposit Insurance Corp. It has been working informally for several years. Source: asiainsurancereview.com

Malayan Insurance continues to report good technical results for its motor business, which helps offset the unfavourable performance of its fire business, notes AM Best. The insurer's overall underwriting performance has been hampered by volatility and unfavourable loss experience from its fire business over recent years, driven by catastrophe and large loss events. Malayan Insurance, the biggest non-life insurer in the Philippines has reported a five-year average combined ratio and return-on-equity ratio of 99.9% and 4.6%, respectively (2016-2020), a performance which AM Best assesses as adequate. Investment income, which is comprised of interest and dividend income, continues to be the principal contributor to Malayan’s overall earnings. Source: asiainsurancereview.com

Global insurance demand will grow by an above-trend 3.3% in 2021 and 3.9% in 2022, says Swiss Re in its latest sigma report titled "World insurance: the recovery gains pace". The global reinsurance giant forecasts a much faster rebound than from the global financial crisis (GFC) of 2008–09. The economic recovery and the strongest rate hardening for 20 years in non-life insurance commercial lines will push premiums 10% above pre-COVID19-crisis levels this year and lift the global insurance market to more than $7tn by the end of 2022. In 2020, global real premiums fell 1.3%, about a third of the drop in GDP. As expected, premiums held up better in emerging markets (+0.8%) than advanced (-1.8%), largely due to the strength of China. Source: asiainsurancereview.com