A new study published in a recent issue of scientific journal Science says that droughts are coming on faster and higher global temperatures are increasing the frequency of flash droughts. Droughts are generally considered a long and slow developing climate hazard. A persistent lack of rainfall dries out soil and vegetation, followed by declining water levels in rivers and lakes. Droughts may build and endure for years over large areas, with snowballing consequences for people and the environment. Conversely, droughts can arise rapidly, changing conditions from ‘normal’ problematically to dry in a matter of weeks. These so-called ‘flash droughts’ are akin to flash floods in that they appear suddenly with little warning. Consequently, impacts can be severe because there is little time to prepare for or deal with such a drought before it is too late. These abrupt dry spells could have grave consequences for people in humid regions whose livelihoods depend on rain-fed agriculture. The study found that flash droughts occurred more often than slower ones in tropical places like India, Southeast Asia, sub-Saharan Africa and the Amazon basin. Nanjing University of Information Science and Technology hydrologist and lead author of the study Xing Yuan said, “Even for slow droughts, the onset speed has been increasing.” The world has probably always experienced rapid-onset droughts, but only in the past decade or two have they become a significant focus of scientific research. New data sources and advances in computer modelling have allowed scientists to home in on the complex physical processes behind them. The study said human-caused climate change is a major reason. Source: asiainsurancereview.com

Only 9% of global organizations are taking an agile, holistic and mature approach to secure identities throughout their hybrid and multi-cloud environments according to a new study by cyber security company CyberArk. CyberArk had conducted a global survey to explore trends in identity security adoption and the relative maturity of organizations embarking on related strategies. The report The Holistic Identity Security Maturity Model: Raising the Bar for Cyber Resilience found that in APAC, only 60% of C-level executive believe that they are making the correct identity security-related decisions. The gap highlights the perception that overall security can be achieved by making the right technology investments but that is only part of the story. Strategically maximizing those investments to include implementation and integration with existing environments, breaking down silos and improved training are equally important. As a result of a successful cyber security attack tied to an identity-related or permission/entitlement/credential-related incident in the last 12 months, APAC organizations suffered from the following business impact: Loss of customers/revenue: 44% Paid compliance fines: 47% Had difficulty responding to an audit/failed an audit: 49% Impact on the ability to provide services: 51% Top reasons listed by APAC organizations that hold them back from optimizing its strategy on identity-related security issues are the lack of cyber security staff (41%) as well as the competency to secure identities (38%). Over 40% of the global respondents’ identity security programmes, however, are in the earliest stage of maturity and lack foundational tools and integrations to quickly mitigate identity-related risk. An expanding identity attack surface, IT complexity and several organizational roadblocks contribute to this widespread identity security deficit. The report includes the inputs of 1,500 cyber security professionals globally and also introduces a identity security maturity model to help cyber security leaders assess their current strategies, uncover risks and take steps to strengthen cyber resilience. Cyber security needs to be aligned with business goals The majority of organizations participating in a new cyber security survey were found to be reactive in their approach in defending against cyber threats and piecemeal when it comes to cyber security investments. The survey conducted by cyber security firm WithSecure has found that most companies are investing in security solutions that are tactical and reactive, but not in line with strategic aims of the organization. The survey included more than 400 global cyber security and IT decision-makers and was conducted by Forrester Consulting. The 22-page survey report published in March 2023 reveals that as a result of the current reactive approach the security goals become detached from business goals, resulting in organizations investing in defenses against threats that aren’t relevant to their business or goals. According to Forrester an outcome-based security supports business goals rather than merely reacting to perceived vulnerabilities. It enables business leaders to simplify cyber security by cultivating only those capabilities that measurably deliver their desired outcomes as opposed to traditional threat, activity-based or ROI-based methods. The report said a more holistic approach to cyber security should strive for outcomes related to risk management, customer experience, resilience and visibility of the threat surface and risks. The outcomes should also pertain to skills, resources and response speed and agility. WithSecure cyber security adviser and head of solutions and product marketing Paul Brucciani said, “Outcome based security is a way to make decisions about what you need to protect and how. But it’s a discipline, it is very easy to buy and implement a new tool, much more difficult to switch off the legacy systems.” More than 80% of the survey participants said they were interested in, planning to adopt, or expanding their adoption of outcome-based security solutions and services, but 60% of them said their organizations are reactive, not proactive and they respond to individual cyber security problems as they arise. CEO insights on cyber resilience A first-of-its-kind study has attempted to explore the minds of CEOs in managing cyber risk. The study was conducted jointly by ISTARI, a Temasek-founded global cyber security firm dedicated to helping clients build cyber resilience and Said Business School at the University of Oxford. The study draws on 37 in-depth interviews with global CEOs, nine of whom have endured a serious cyber attack. The 29-page The CEO Report on Cyber Resilience applies a top-management lens to cyber security risks and underscores the critical role CEOs play in building cyber resilience. It shares insights from 37 American, Asian and European CEOs whose businesses' average annual revenue is $12bn, employing an average of 40,000 employees. One-third of the interviewees are from Asia. Nine of the CEOs interviewed had guided their company through a serious cyber attack. The CEOs acknowledged that they are formally answerable to regulators, shareholders and their boards for cyber security yet the majority (72%) said they were uncomfortable making decisions about it, often leading them to delegate responsibility for and understanding of cyber security to their technology teams, which can jeopardize resilience. ISTARI head of knowledge and insights and co-author of the report Manuel Hepfer said, "Many CEOs we spoke with highlighted the agonies of having to make existential decisions on imperfect information under extreme pressure in an area they lack familiarity and intuition." The report outlines four mindsets CEOs need to lead cyber resilient businesses 1. All CEOs interviewed said they feel accountable for cyber security. However, a parallel ISTARI survey of Chief Information Security Officers (CISOs) found one in two European (50%) and almost a third of US (30%) CISOs did not believe that their CEOs feel accountable. This gap in perception, according to the research, lies partly in the meaning of accountability: instead of seeing themselves as accountable - being the face of the mistake - CEOs should assume co-responsibility for cyber resilience together with their CISO. 2. CEOs should stay away from blindly trusting their technology teams. Instead, they should move to a state of informed trust about their enterprise's cyber resilience maturity. 3. CEOs should embrace what the authors call the 'preparedness paradox': an inverse relationship between the perception of preparedness and resilience - the better-prepared CEOs think their organization is for a serious cyber attack, the less resilient their organization likely is, in reality. 4. CEOs should adapt their communication styles to regulate pressure from external stakeholders who have different and sometimes conflicting demands. Depending on the stakeholder and the situation, CEOs should either be a transmitter, filter, absorber or amplifier of pressure.

We would like to share with you the 2022 ARISE-Philippines Annual Report entitled Harmonizing and Synergizing Actions for Resilience. As you are all aware PIRA is a leading member of ARISE Philippines as Insurance is considered a Priority Area (of activities) for the Organization. Highlights of the activities held starts on page 26 onward.

By Michael F. Rellosa LOW pressure areas, or tropical depressions, in mid-April seem to be turning into the norm (we were just visited by Tropical Depression "Amang" a few days ago). If I remember right, state weather bureau Pagasa did mention that the "La Niña" has ended and we are now expecting the "El Niño" phenomenon characterized by the likelihood of increased above-normal rainfall, which in turn could lead to the destruction of crops and hamper production of other agricultural commodities, not to mention floods in major population centers. I have said it before and am saying it again — the Philippines is now considered the most vulnerable nation to catastrophic events and a significant way of protecting ourselves against the loss or damage that can occur due to such events is to insure ourselves. Here comes the rub — the international reinsurance market has hardened to such an extent that local insurers are giving a long hard think about whether or not it would be economically feasible for them to continue to offer such coverages. In other words, at a time when the country needs access to catastrophic insurance covers, the supply may be dwindling. The insuring public is now faced with a double whammy, a decrease in the supply of reinsurance protection for Cat Perils leading to a market driven price correction (read drastic increase) and/or the decrease in local direct insurers who may want to offer such a cover both of which are ill-timed and detrimental to our post-disaster recovery. If you will remember, the non-life insurance industry came up with a study to review the prevailing Nat Cat rate for typhoons, floods and earthquakes, the combined rate of which is 0.15 percent. According to the studies made by both local and foreign experts, the technical (or risk rate) should be 0.4 percent. However, the industry recognized that a jump from the prevailing 0.15 percent to 0.4 percent would be too drastic and may shock the market. It was then decided to do it in smaller increments, i.e., 0.15 percent to 0.2 percent and ultimately 0.4 percent. The regulators (Insurance Commission) then vetted the suggested rate and issued a circular advising all concerned that the new minimum Cat Rate would be 0.2 percent beginning January 2023. However, there were questions from several quarters and the Insurance Commission rescinded its circular and placed the increases in abeyance. All these coincided with the change in leadership in the commission. We now have a new commissioner in the person of lawyer Reynaldo A. Regalado who hit the ground at a sprint. There are many important and existential issues besetting the non-life industry and its stakeholders, primary of which is the insuring public itself, so the new commissioner will have to prioritize. Mind you, among the other industries regulated by the commission are the life, pre-need, HMO, MBA — all of which have specific issues that need to be addressed. It is a good thing that the commission has an expert team of deputy commissioners, directors and staff whose valuable inputs and institutional memory can aptly and ably assist the new commissioner in his gargantuan task ahead. With the commissioner's background, experience, analytical and diplomatic skills, and more importantly, his willingness to dialogue, we are confident that the commission is in good hands and pressing issues will be given due course and resolved for the greater good. This brings me back to the task at hand — to make the general populace aware of the benefits of insurance and how insurance really works. It is understandable that people distrust or even fear unfamiliar things and this is where we have to start. It took me several decades to understand the nuances of the industry and even today I still consider myself a student. Hopefully I can share this journey of learning with you through this column or some other opportunity. Source: manilatimes.net

To know more about the event visit our website: https://iiapinc.wixsite.com/2023insurancesummit

The Surety Committee held a face to face meeting at the PIRA Board Room, it’s first quorum for the year 2023. Atty. Lee Realino F. Reyes, Malayan Insurance Company, Inc. Ms. Maria Janelyn B. Rabanes, BPI/MS Insurance Corporation Mr. Michael Rellosa, PIRA Executive Director Atty. Maria Luisa Cecilia E. Garcia, AXA Philippines formerly Charter Ping An Ms. Evangeline Capili, Chairperson, President of Philasurer Ms. Regine Sarmiento, Cocogen Insurance, Inc. Atty. Rolando Panes, Pioneer Intercontinental Insurance Corporation

Insurers and takaful operators (ITOs) have reported increased reinsurance rates on the renewal of cover, higher reinstatement costs for reinsurance coverage when limits are exhausted, and higher deductible thresholds that apply for claims, especially for excess of loss treaties, says Bank Negara Malaysia (BNM). In its “Financial Stability Review – Second Half 2022” report, says that more onerous clauses—such as loss participation clauses which require ITOs to partially contribute to reinsured losses—have also been introduced. In addition, ceding commissions paid to ITOs have been on a reducing trend. The hardening in the reinsurance market has been driven mainly by large losses from natural catastrophes in recent years leading to reduced global capacity. ITOs expect the hardening cycle to persist in the near term. While this could place upward pressure on direct premium rates, particularly affecting costs borne by businesses for commercial insurance, steps being taken by ITOs to optimize their reinsurance programmes would help moderate the impact on business costs. Any impact is further mitigated by the relatively low contribution of insurance costs to total business costs. The Bank continues to monitor the impact of developments in this area on end-consumer premiums and the adequacy of reinsurance arrangements put in place by ITOs to protect against a more volatile claims environment. Source: asiainsurancereview.com

1 April reinsurance renewals progressed in an orderly fashion in Asia Pacific, as the reinsurance market found itself on a more sustainable footing, says Aon, a leading global financial services and risk solutions company. In Its “Reinsurance Market Dynamics April 2023” report, which provides a comprehensive assessment of key market trends in the context of the 1 April 2023 renewals period, Aon said, “Following a turbulent 1 January, reinsurers and insurers in APAC navigated a challenging environment to achieve a pragmatic outcome at the 1 April renewal.” 1 April is a notable renewal for the APAC region, dominated by Japan, a globally important insurance market, and home to some of the world’s largest catastrophe reinsurance placements. There are also significant renewals in South Korea and India, including major crop reinsurance programmes. Some countries in APAC have historically been somewhat immune to the reinsurance market cycle, says the report. And while the demand-supply dynamics that shaped the January renewals continued into April, the consequences were more moderate. Capacity was sufficient to meet demand, and while there were few new entrants in APAC, many established reinsurers were willing to deploy more capacity. Pricing Broadly speaking, pricing for catastrophe covers and retention levels increased, but not to the levels seen in the US and Europe at 1 January. Japan, in particular, benefited from price corrections implemented in response to recent catastrophe events. Across the region, insurers also leveraged catastrophe modelling and analytics to present a custom view of risk, helping to attract capacity and negotiate more favourable terms. Next Attention now turns to mid-year property catastrophe renewals in APAC, in particular Australia and New Zealand, which have both experienced unusually large catastrophe events since the last renewal. Although challenging, Aon says it anticipates capacity available at a price at the mid-year renewal for the APAC region. Source: asiainsurancereview.com

Insurers face a crisis of confidence as global warming makes weather events unpredictable and increases damage according to one of the world's largest insurance broker Aon. Aon president Eric Andersen said that climate change is destabilizing the insurance industry, driving up prices and pushing insurers out of high-risk markets. Mr. Andersen was testifying before the budget committee of the US Senate. He said climate change is injecting uncertainty into an industry built on risk prediction and has created “a crisis of confidence around the ability to predict loss.” Mr. Andersen said reinsurance companies, which help insurers pay catastrophic losses, “have been withdrawing from high-risk areas, around wildfire and flood in particular. Just as the US economy was overexposed to mortgage risk in 2008, the economy today is over exposed to climate risk.” The senate budget committee’s hearing is aimed at drawing attention to climate risk and its potential threat to the federal budget. The hearing covered familiar themes and it happened at an opportune moment. Major hurricanes and wildfires have driven insurance markets into crisis in Florida, Louisiana, California and are weakening insurers in other western states such as Colorado and Oregon. Florida’s state-run property insurer warned recently that hurricane Ian had ‘significantly depleted’ its reserves and that it might impose a surcharge on millions of policyholders in the state if another major hurricane generates massive claims. Mr. Andersen acknowledged it is a problem dealing with ‘weather anomalies’ caused by climate change that make storms and other events harder to predict. He said, “The models of old that have been used looking backwards are not as valuable to the models that need to be developed for a changing climate.” Source: asiainsurancereview.com