A "Trilemma of Tension" in the global power sector is encompassing stress between energy security, affordability and sustainability and has led to continuing volatility in the sector according to a new market review by WTW. The 2023 Power Market Review suggests that risk managers should invest in horizon-scanning to assess their own unique risk profile and to work with partners to enhance their awareness and better inform and guide suitable risk mitigation, management and transfer strategies. The Trilemma amplifies the uncertainty in the sector. This is also aided by the global polycrisis, including the rising global cost of living, supply-chain disruptions and geopolitical tensions. With potential recession looming and sustained inflation, the power sector faces the risk of assault on multiple fronts according to the report. The report highlights the changing panoply of risks challenging the power sector. It includes insights which discuss: ways to optimize risk strategies as budgets tighten and premiums rise potential risks involved in asset life-extension strategies; and the potential benefits of parametric insurance for power risks. WTW head of global resources Graham Knight said, “The challenges we reported in 2022 – the Russia-Ukraine conflict, global inflation, energy transition and climate change, are ever-present. We have seen some positive developments, though. Wholesale gas markets have eased and supply has shifted away from Russia. There are signs of global inflation easing as economies respond to higher interest rates and growing momentum behind the energy transition. “On the other side of the equation the crisis in the Middle East, precipitated by the Israel – Hamas conflict, combined with the very real potential for a global recession, creates further uncertainty for generators and markets. High levels of natural catastrophes are also driving major losses across the continents, and they’ve showed no sign of returning to lower historical norms.” He said, “Meanwhile, transmission networks are coming under pressure from a higher reliance on intermittent power, as re-commissioned coal plants are turned off and gas-fired output is deployed to balance the system.” Power Market Review also considers the current state of the insurance market and these include profitability in the power insurance market, property risk pricing, international liability and construction-risk pricing. Source: asiainsurancereview.com

Data from Net Zero Tracker shows that over 1000 large companies have set net-zero targets, however, only 4% of these commitments meet best-in-class standards set by the UN. Furthermore, just 37% of targets fully cover Scope 3 emissions, while a scant 13% specify “quality conditions” under which carbon offsets would be used to meet their goals — suggesting most companies depend on low-quality offsets rather than emissions reductions to meet their climate goals. Net Zero Tracker has assessed the emissions targets of 1,003 companies belonging to the Forbes Global 2000 list of the world’s largest firms. It found that only a few adhere to the UN’s Race to Zero “Starting Line criteria”, which require targets to cover all greenhouse gases produced by a company — meaning Scope 1, 2, and 3 emissions. The criteria also requests that companies set clear conditions for the use of carbon offsets, implement a climate transition plan, and make immediate emission reduction efforts, among other things. Net Zero Tracker project head John Lang said, “A clear line in the sand on net zero has surfaced. Countless net zero targets are credibility light, but now we can say for certain that most of the world’s largest companies have shifted to the right side of the line on net zero intent.” Almost all UK companies in the Forbes Global 2000 have net-zero goals, with 72 out of 77 setting targets, according to the group. Only one UK-based company in the list — private equity firm 3i — has yet to establish a climate mitigation target. Source: asiainsurancereview.com

Vietnam has joined the ASEAN Compulsory Motor Insurance (ACMI) system, which requires motor vehicle owners from other ASEAN member states transiting or travelling to Vietnam to register for compulsory third-party liability insurance. ACMI is used as a data hub for member states participating in the system to issue insurance policies. Motor vehicle users can access the ACMI system to register for a blue card — proof that a motor vehicle has been issued an insurance policy that meets the minimum insurance requirements. VINABAI is the Vietnam National Agency that operates the ASEAN Compulsory Motor Insurance programme in Vietnam, reported Vietnam News Service. It issues the motor insurance policies, dubbed “blue cards” and assists in handling accidents (investigation, loss assessment, compensation settlement, and dispute resolution in accordance with the regulation) caused by a vehicle possessing a blue card in the country. Mr. Nguyen Anh Tuan, chairman of VINABAI and vice chairman of the Vietnam Insurance Association, said, "In addition to affirming that ASEAN motor vehicles transiting into Vietnam need to register for compulsory motor insurance, this connection will help effectively promote the transportation of vehicles and goods among ASEAN member states.” VINABAI has members who are representatives from other relevant agencies such as: the Department of Insurance Management and Supervision of the Ministry of Finance; the Traffic Police Department of the Ministry of Public Security, National Traffic Safety Committee; Vietnam National Road Administration; the Border Guard Command; Vietnam Insurance Association, and Bao Viet Insurance Corporation. Bao Viet Insurance Corporation is the only Vietnamese insurer designated to issue the blue cards in the country. A protocol under the ASEAN Framework Agreement on the Facilitation of Goods in Transit (AFAFGIT) mandates the requirement for a Third Party Liability Insurance for vehicles involved in the transit movement. Operators of such vehicles have to purchase the required insurance policies covering the country of departure, transit and destination. The insurance documents will have to be carried in the vehicle for inspection at the border by competent authorities of the countries involved in the transit movement. Once the purchase is completed, The insured will receive the insurance certificates and blue card for all the countries in the transit movement. The competent authorities entrusted to enforce the insurance requirements can inspect the insurance certificates any way along the designated routes. Source: asiainsurancereview.com

Given the country’s vulnerability to catastrophic disasters, a large proportion of the population in the Philippines still does not have Nat CAT insurance. In conversation with Asia Insurance Review, Philippines Insurance and Reinsurance Association’s Mr. Michael Rellosa raised awareness of the lack of Nat CAT insurance coverage in the Philippines, saying that the country is in a ‘perfect storm’, with the price of Nat CAT insurance increasing while supply is decreasing. By Reva Ganesan The lack of widespread Nat CAT insurance coverage in the Philippines has been a concern to insurance and reinsurance companies since 2021. Despite the country’s vulnerability to natural disasters such as typhoons and earthquakes, a significant portion of the population and private businesses do not have adequate insurance coverage against such events. “We are quite concerned as studies done by the World Bank in the US indicate that there is a coverage gap in the Philippines, with huge swaths of the populace not having cover against Nat CAT events,” said PIRA executive director Michael Rellosa. To make matters worse, the country was expecting to face the fast-approaching super typhoon Mawar, also known as typhoon Betty, which was reported to be the second major weather disturbance for the year in the Philippines. Although the typhoon largely skirted the island, the weather disturbance has sucked in a stronger monsoon season in the Philippines, leading to more rain and severe thunderstorms. “Mawar formed almost immediately as a super typhoon and even normal monsoons, which our farmers depend on for water, are getting stronger due to climate change. “Now that we are getting more super typhoons than ever, even a normal thunderstorm can wreak havoc, which is why people need more coverage. There is a dearth of coverage, mainly because it is too expensive,” said Mr. Rellosa. Many individuals and businesses, particularly those in low income and vulnerable communities, find it challenging to afford Nat CAT insurance premiums, which can be relatively expensive due to the high frequency of such events in the Philippines. Addressing the lack of Nat CAT insurance coverage in the Philippines could require a multi-faceted approach with efforts focusing on improving affordability, increasing awareness and enhancing risk assessment capabilities. Collaborative efforts between the government, insurance industry and stakeholders are crucial to developing innovative solutions and promoting the availability and accessibility of Nat CAT insurance. Pooling facility needs more support Launched in the 1Q 2021, the Philippine non-life insurance industry together with the regulators embarked on creating a programme called the Philippine Catastrophe Insurance Facility (PCIF) that could potentially close the coverage gap. However, due to the toing and froing in the local market, it took some time for the industry to build PCIF. There were a lot of fence sitters and what was forecast to be a 55-member facility only yielded 17. Many wanted to test the programme before joining and skepticism was high. “Seventeen companies versus 55 is a huge difference and we saw at the time that the market was hardening because of climate change. The timing was off and in other words, we were not able to get sustainable rates to be able to push PCIF. We then created PCIF Two,” he said. PCIF Two is a combination of traditional indemnity based insurance and parametric cover, with a focus on affordability. Products will be sold in bite-sized pieces. Premiums will be a lot lower, and consumers can buy affordable coverage instead of a total lump sum. PCIF Two is currently in talks with members of the programme. Closing the protection gap in agriculture insurance The Philippine government and the private sector are now working together to increase the coverage of agriculture insurance, however they have barely scratched the surface. In the past, increasing agriculture cover was managed solely by the government-owned Philippine Crop Insurance Corporation. “A protection gap has been clearly identified and the World Bank is saying that it is better for the private sector to lend its efficiencies and be able to offer its capacity for agriculture insurance which includes crop insurance and covers against poor farming implementations and equipment,” said Mr. Rellosa. “We are starting to get out feet wet. The Philippine insurance sector is not an expert when it comes to agriculture insurance as we were hands off for a very long time but now companies that are willing to step into agriculture insurance are starting to build the capacity for it,” he said. He also said that it would be a long time before anything gets done. Post pandemic, the insurance industry has recognized that technology is vital for microinsurance as the traditional channels of distribution such as agents and advisers cannot be everywhere all the time. Technology is more important than ever for farmers and other microinsurance policyholders to manage their finances and premiums. “Microinsurance in the Philippines is far ahead of other countries and it has become a valuable avenue when it comes to closing the gap, even against Nat CAT. “As we discover new ways of closing the gap, we see it is increasing. We are playing catch-up. The gap increases, we come up with something and then the gap increases again. It’s a never-ending process,” he said. Regulation becoming tougher due to IFRS17 Regulation is becoming increasingly tough in the Philippines as the country’s insurance sector transitions to IFRS17. Companies need to invest in new computer systems that will have to be compliant with IFRS17 and changes are expected to take effect in 2025. Regulators have also hoisted the Own Risk and Solvency Assessment framework onto insurers that have $2bn in premiums, which adds to the mounting pressure from the IFRS17 transition. “It is taking a lot of effort from individual companies to do what they are supposed to do and to be able to meet the requirements of such frameworks and regulations. “The fact that we are faced with all these new regulatory developments in rapid fire succession gives rise to capacity issues such as cost, systems, metric, operational and manpower issues. We would like the government to recognize these threats and ease up on implementing additional ones,” said Mr. Rellosa. Source: asiainsurancereview.com

By Michael F. Rellosa IN earlier columns, we talked about how risks are managed, and given the continuing hard reinsurance market, evidenced by shrinking capacity and the increased cost of reinsurance protection, it may be a good idea to take stock of what the insuring public can do to help themselves. There are five generally accepted risk-handling methods, and let us review them and see what method we can use to help us face natural catastrophe risks (Nat Cat) such as typhoons, earthquakes and floods. 1. Risk transfer. For those who can afford to insure themselves and their property, this would be by far the easiest. You merely buy a policy that would cover you against these Nat Cat events, pay the premiums, and rest easy knowing that in case you suffer a loss or damage due to these events, you will get indemnified. But this method is getting more expensive and scarcer, given that the risks themselves are increasing both in number and intensity due to numerous factors, including climate change. 2. Risk avoidance. This method is for those just starting out to build their homes and assets. For example, before you purchase land to build your houses on, check the flooding history of the area as well as the proximity of your chosen plot of land to a fault line or shore. This way, you can avoid flooding, earthquake damage and storm surges. Obviously, this would not be very useful for someone who already lives in historically flooded areas, near a fault line or along the shore. 3. Retention. There are risks that we sometimes have no choice but to live with. As in the example above, if you already live in a house that gets periodically flooded or live near the shore, you will have to live with the fact that these vents could and will happen. In such instances, one can adopt other risk-handling methods to help mitigate the losses that could occur. 4. Spreading. It is possible to spread the risk of loss to property and people, but this is only possible for those who own property in multiple locations. For instance, a business owner can split his risk by spreading his moveable assets among his various properties or duplicating records and documents and then storing the duplicate copies in the different locations. A small fire in a single location can destroy the entire inventory of goods or records of a company's operations. 5. Loss prevention and reduction. For me, this is the most interesting, as there are numerous ingenious as well as inexpensive ways in which one can try to mitigate a loss with varying degrees of success. Sadly, none are totally effective, but taken in combination, they do add a significant amount of protection. Let me give you an example I used in my own home. I live along the coast, and historically, it has probably flooded only a handful of times in my lifetime. These floods, though, breached the ground level of my residence, and luckily there was ample warning for us to move important items to the second floor. Tired of this, I purchased sand used for construction and bagged it into 25-kilogram sacks for ease of carriage. Every time Pagasa issues an orange rainfall warning or above or issues a flood warning, the SOP at home would be to deploy these sandbags across all entrances and drains where water may enter. This, combined with a sump pump, has saved us on more than one occasion. There are more sophisticated flood barriers now available on the market made by countries where fighting floods is a way of life, such as the Netherlands and parts of the US; all you have to do is surf the internet to see what is available. There are also ways to protect the car in the garage. We resorted to purchasing several heavy-duty jacks, and before the flood arrived, we jacked up the car above the flood line. This has proven effective for us, but I am still searching for a better way. If you remember post-Ondoy, there were plastic bags in which you could drive your vehicles and seal. I never used them as I was afraid they could add to the buoyancy and float the vehicle, making it susceptible to bumps and scrapes. Even entire houses can now be made to float to follow the water level. However, the best way is traditional Philippine architecture, where we build on stilts, leaving the silong," or ground level, free. I suppose our ancestors knew best, and it would be wise of us to follow their example. In any event, stay safe and use your inherent ingenuity to come up with mitigating solutions to these Nat Cat events that will not be going away any time soon. Source: manilatimes.net

By Herminia S. Jacinto AFTER a three-year hiatus, insurance industry conferences are back with a vengeance. Although during those years, virtual conferences were held by various groups and associations. Technology was at its best. Participants just opened their laptops and or computers and they were brought to the simulated halls of Marina Bay Sands Hotel in Singapore, a favorite conference venue. But it was not the same as in-person meetings and conferences. We missed the warm handshakes and hugs from friends and business partners. My former job as a reinsurance player made me attend those conferences where I met almost everybody who I needed to deal with. I cannot remember anymore how many cups of coffee and glasses of wine went into my system during those meetings and the socials that came with them. But why are there so many conferences that you have to attend? My former boss from our holding company, a banker, used to ask me that every time I sought approval to attend one. What do you guys talk about? He missed the point that insurance is not a stand-alone business. Sharing and reinsuring risks mitigate the possible losses that may be incurred by these companies. The insurance industry is not the only business group that holds conferences both locally and in other parts of the world. One can see the ads in the papers inviting participants to conferences on various topics. Locally, we have the Philippine Insurance Summit which was initiated by the grand old man of the industry, Reynaldo de Dios, owner and publisher of the Insurance Philippines. De Dios has since retired from active practice and has endorsed the holding of the summit to the Insurance Institute for Asia and the Pacific. This summit is held in the second quarter of every year. Speakers come from some of our government agencies in charge of agriculture, climate change, environment and other agencies with a direct relationship to insurance. Volcanic eruption is always a favorite topic with Science and Technology Secretary Renato Solidum doing the presentation. Experts in insurance and reinsurance from global players share their knowledge and expertise gained from their various clients all over the world. Singapore is the favorite venue for these insurance conferences. The very popular and well-attended conference is the Singapore International Reinsurers Conference which will be held in November this year in Marina Bay Sands. This conference attracts participants from all over the world wanting to meet their business partners and friends. It is a huge market where insurance players can look for new business and exchange their own as well. One can learn a lot of new products and processes from experts in the field of insurance. Our local underwriters will be busy looking for the scarce reinsurance support for the risks that have been affected by the recent calamities. Meeting the counterparts face to face results in better terms and strong relationships. Another popular gathering is the East Asian Insurance Congress (EAIC), which is a grouping of 12 cities in Asia. The very first EAIC was held in Tokyo in 1962, and the second one was in Manila. Since then, conferences were held every two years hosted by the member cities. The last face-to-face conference was held in Manila in May 2018 and drew around 1,000 delegates and participants. The pandemic prevented the holding of the conference in Seoul, Korea in 2020 and 2022. Instead, a virtual conference was held but participation was not the same as the in-person ones. We are now looking forward to the 2024 conference which will be held in Hong Kong. This conference combines technical sessions and social events. But what I think is most appreciated and productive is the networking among the participants, clients, intermediaries, insurance and reinsurance companies. Attending these conferences must be expensive, one will ask. Yes but let us not count the cost but the benefits that the companies and the participants get from them. Insurance companies provide budgets for these conferences and choose very well the person or persons they send to them. Save the date: September 2024 for the EAIC in Hong Kong! Source: manilatimes.net

Australian cyber insurance cover buyers will now be able to buy and make use of innovative active cyber insurance products. The US based cyber managing general agent and cyber security firm Coalition, will now offer its innovative active cyber insurance products to Australian buyers too. Active cyber insurance works with organizations to help them understand their cyber risk profiles, improve their defences and prevent future attacks. Policyholders receive a risk assessment to better understand their existing security posture and cyber defensive areas they should reinforce. Coalition’s cyber risk management platform Coalition Control receives and communicates real-time alerts about current vulnerabilities and emerging threats through continuous scanning and monitoring to help identify risks before an incident can escalate and lead to significant business disruption. Lastly, if and when an attacker inevitably breaks through, Coalition offers an in-house claims team to help businesses quickly recover from an incident and get back to normal operations. Capacity for Coalition’s offering is provided by a multi-year agreement with Allianz Australia. Allianz is a strategic partner of Coalition, also providing capacity for the company’s US and UK cyber insurance programmes. Coalition CEO and co-founder Joshua Motta said, “In the last year alone, countless businesses in Australia have suffered high-profile cyber attacks, affecting millions of Australians and pushing cyber security and data privacy to the forefront of the national conversation. Yet, only 20% of Australian SMEs currently have cyber insurance, and even fewer brokers specialize in the coverage area.” “We have observed the intense business need in Australia for access to a comprehensive solution like Active Cyber Insurance that can detect, assess, respond to, and, ultimately, prevent cyber risk,” said Mr. Motta. Allianz Australia chief general manager Phung Ly said, “Cyber risk is a significant threat impacting Australian businesses today. Allianz and Coalition partnership will help provide our broker partners and their customers this unique solution, which combines comprehensive insurance coverage and active security protection to help safeguard Australian businesses against future cyber-attacks. Allianz Commercial global head of cyber Scott Sayce said, “Early detection and effective response capabilities will be important for our customers as threat actors continue to exploit vulnerabilities.” Source: asiainsurancereview.com

The 2023 edition of Aon's biennial survey of global risks has revealed that human capital issues are no longer simply a "people problem", but a major business risk that is fuelled by rising healthcare costs, the competition for talent, workforce shortages and a lack of retirement preparedness. The professional services firm’s Aon's biennial Global Risk Management Survey released in November 2023 found that cyber risk and business interruption have again emerged as the top two risks while supply chain ranks at the highest level in 14 years. The survey gathered input from around 3,000 risk managers, C-suite leaders and other executives from 61 countries and territories to identify their most-pressing business challenges. Aon CEO Greg Case said, "Through the use of advanced analytics and more integrated risk capital and human capital capabilities, we're helping clients quantify, manage and match capital to the risks they recognize today as we innovate on their behalf to serve their future needs." In 2023, "attracting and retaining top talent" risk ranked fourth globally, after not breaking the top 10 in 2021, demonstrating a shift in how risk managers are viewing human capital today. Still, only 11% of the survey respondents indicated they have quantified their people risks, illustrating a significant gap between risk awareness and risk preparedness. Despite warnings and headlines, climate change and AI are notably missing from the global top 10 ranking, suggesting a lack of awareness about the potential impact of these issues on the corporate risk profile. Cyber attacks and data breaches remain the top risk in this year's survey and also show the highest level of risk readiness. Consistent with that, the top risk has one of the lowest reported losses of income and one of the highest percentages of risk mitigation actions across all top ten risks. Risk of business interruption remains at number two, reflecting the reality that business interruption events are increasing and can affect multiple industries and companies simultaneously. Overall, the top ten global risks according to the 2023 Global Risk Management Survey are: Cyber attacks/ data breach Business interruption Economic slowdown/ Slow recovery Failure to attract or retain top talent Regulatory/ legislative changes Supply chain or distribution failure Commodity price risk/Scarcity of materials Damage to reputation/ brand Failure to innovate/Meet customer needs Increasing competition Source: asiainsurancereview.com

Most of the insurers continue to support projects to increase oil and gas production, even though climate scientists and experts agree that this is incompatible with the 1.5°C Paris climate target. The seventh annual scorecard on insurers’ climate policies published by The Insure Our Future campaign in October 2023 said that the growing frequency and severity of floods, hurricanes, wildfires, droughts and other climate-related disasters has seen insurance payouts for natural catastrophes soar to an average $110bn a year since 2017, more than twice the average over the previous five years. The fossil fuel insurance earned the industry around $21.25bn in 2022 according to research commissioned for the report from market intelligence company Insuramore. Insurers on the Lloyd’s of London market collectively are the world’s biggest fossil fuel underwriters with an estimated $1.6bn-$2.2bn in annual premiums. The top ten individual insurers include AEGIS, Chubb, Allianz, AXA, Fairfax Financial, Zurich, W. R. Berkley and AIG. Insure Our Future campaign global coordinator Peter Bosshard said, “The insurance industry first warned about climate risks in 1973 and these have now become a grim reality, particularly for low-income countries and communities which have contributed least to the climate emergency. Mr. Bosshard said, “Insurance companies are now abandoning customers affected by climate risks, yet they continue to fuel the climate crisis by underwriting and investing in the expansion of fossil fuels. If insurance companies took climate science seriously, they would fully align their underwriting and investment strategies with a credible 1.5°C pathway and end all support for increased fossil fuel production.” Source: asiainsurancereview.com

We cordially invite you to attend the Digital Pilipinas Festival Year 2. It is happening this November 20–24, 2023, with our festival proper happening on November 21 and 22 at SMX Aura, Bonifacio Global City, Taguig, along with our other sub-festivals: Philippine FinTech Festival Philippine Halal Economy Festival Philippine InsurTech Festival Philippine PropTech Festival Philippine HealthTech Festival Philippine Sustainability and Climate Festival Philippine Digital SME Festival Invest Philippines Festival Philippine Digital Government Festival Philippine Cybersecurity & TrustTech Festival Philippine Digital Economies and Esports Festival A week-long aggregation of innovation and technology stakeholders featuring leading brands, government regulators, country partners, sectoral representatives, technologists, start-up ecosystem of investors and founders championing several industries. Below is the Agenda of Digital Pilipinas Festival happening on November 20-23, 2023, for your info/reference. To our members, should you wish to participate in this event either as a volunteer speaker or a participant, just let us know so PIRA can endorse you to the event organizer and provide you with a free pass.