Global reinsurer Munich Re has withdrawn from the Net-Zero Insurance Alliance (NZIA). Munich Re is, however, sticking to its already declared climate targets. Munich Re CEO Joachim Wenning in a press release said, “In our view, the opportunities to pursue decarbonization goals in a collective approach among insurers worldwide without exposing ourselves to material antitrust risks are so limited that it is more effective to pursue our climate ambition to reduce global warming individually." The climate targets set for itself by Munich Re say that in a first step, green house gases’ (GHG) emissions related to the investment portfolio will be reduced by 29% by the end of 2025 and thereafter successively brought down to net zero by 2050. As for the exploration and production of oil and natural gas (primary insurance, direct and facultative reinsurance), Munich Re will be reducing its climate-related industry exposure in such a way that there will be no associated net GHG emissions by 2050. In a first step, Munich Re aims to reduce emissions by 5% by 2025. As of April 2023, the reinsurer will not insure projects involving new oil and gas fields or new midstream oil infrastructure. At the same time, Munich Re will reduce thermal-coal-related exposure in its direct and facultative insurance business by 35% group-wide by 2025, before eliminating this exposure altogether by 2040. Munich Re since 2018 has stopped insuring new coal-fired plants, coal mines and since 2019 oil sand mines. Regarding the emissions from its own operations, Munich Re has been carbon-neutral since 2015 and previously reduced CO2 emissions per employee by 44% from 2009 to 2019. Current GHG emissions are to be reduced by a further 12% per employee by 2025 By 2030, Munich Re expects to achieve net-zero GHG emissions in its operations. Mr. Wenning said, "Our climate commitment is unwavering. We follow scientific recommendations. To date we are decarbonizing even faster than what is required to reach net zero by 2050." Thirty of the world’s leading insurers and reinsurers are members of the UN-convened NZIA. These (re)insurers have committed to transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) emissions by 2050. NZIA was established in 2021 by eight (re)insurers together. Source: asiainsurancereview.com

MANILA, Philippines – A magnitude 6.2 earthquake rocked Catanduanes at 8:54 pm, Tuesday, April 4, according to the Philippine Institute of Volcanology and Seismology (Phivolcs). #EarthquakePH #EarthquakeCatanduanes#iFelt_CatanduanesEarthquake Earthquake Information No.2 Date and Time: 04 April 2023 – 08:54 AM Magnitude = 6.2 Depth = 072 km Location = 13.90°N, 125.77°E – 150 km N 85° E of Gigmoto (Catanduanes)https://t.co/kpMS8PJIsR pic.twitter.com/ngSZUPevIQ — PHIVOLCS-DOST (@phivolcs_dost) April 4, 2023 The initial report of Phivolcs said the earthquake was a magnitude 6.6. Phivolcs issued Earthquake Information #2 at 10:25 pm and adjusted the quake to magnitude 6.2. Phivolcs said the temblor was tectonic of origin and its epicenter was offshore in Gigmoto town, province of Catanduanes. In the Phivolcs Tsunami Information No. 1, titled “Minor Sea-level Disturbance,” the agency said: “Strong currents and rapid changes of seawater level are expected.” The Phivolcs report added: “Based on the tsunami wave models and early tide gauge records of the tsunami, it is expected to experience wave heights of less than one meter above the normal tides and may be higher on enclosed bays and straits. “It is forecasted that the first tsunami waves will arrive between 09:02 PM to 12:54 AM 05 Apr 2023 (PST). These waves may continue for hours.” Phivolcs recommended that residents of Catanduanes, Northern Samar, and Eastern Samar, should “stay away from the beach and not go to the coast… until the cancellation of the advisory.” As a further precaution, Phivolcs said: “People whose houses are located very near the shoreline of these provinces are advised to move farther inland.” Phivolcs instruments recorded that the earthquake was felt as intensity 4 in San Jorge, Samar; Virac Catanduanes. It was intensity 3 in Prieto Diaz and Sorsogon in Sorsogon; San Policarpio, Eastern Samar; Allen, Biri, Bobon, Catarman, Laoang, Lavezares, Rosario, San Jose, and San Roque in Northern Samar; Calbiga, and City of Catbalogan in Samar. It was intensity 2 in Malinao, City of Tabaco, and Legazpi City in Albay; Daet, Camarines Norte; Iriga City, Pili in Camarines Sur; Kananga, Dulag, Abuyog in Leyte; San Roque in Northen Samar; Bulusan, Prieto Diaz in Sorsogon; City of Borongan in Eastern Samar; Babatngon, Dagami, Dulag, Palo, Santa Fe, and Tanauan in Leyte; City of Tacloban; San Antonio, Northern Samar. While it was intensity 1 in Ragay, Pasacao in Camarines Sur; Quinapondan, Eastern Samar; Alangalang, City of Baybay, and Tabontabon in Leyte; Monreal, Uson, in Masbate; Gumaca, Polillo, Mauban, Guinayangan in Quezon; and Donsol, Sorosogon. Source: rappler.com

Reinsurance buyers were unable to avoid the variable but universal price corrections driving rates up at the 1 April renewals, according to the April 2023 edition of the "1st View" renewals report from Gallagher Re, the global reinsurance broker. Renewals were challenging, with buyers facing similar discipline from the reinsurers to that seen at 1 January. In some cases, particularly within smaller markets that had escaped previous rate hikes, significant structural changes were imposed by reinsurers. These dramatic adjustments may have impacted ceding insurers’ financials profoundly. Mr James Kent, Global CEO of Gallagher Re, said: “No particular geography was immune from the price corrections that reinsurers maintained throughout the 1 April set of renewals. We saw an enhanced pricing impact based on individual client’s performance and their reinsurer relationships, but even the most favoured clients paid more, with reinsurer discipline being evident across the market. “Capacity was adequate to get cedants’ exposures covered, but April renewals are an inappropriate yardstick for the market’s overall supply-demand relationship as it is so heavily weighted towards Japanese exposures, which are significantly lower than the peak US exposures. But we certainly didn’t see any meaningful new capacity, or any other indication that reinsurers are prepared to cede their hard-won pricing territory any time soon. The combination of catastrophe losses and mark to market investment losses in 2022 means reinsurers will continue to coax the market towards rates which will help returns exceed the cost of capital.” Key findings: The market has faced similar discipline to that seen at 1 January, although with a more intense focus on pricing and contract improvements across all territories and to all business lines Capital remains constrained with limited signs of new capacity entering the market and existing reinsurers facing mark-to-market investment losses In Japan, long term reinsurer relationships, aided by improvements in primary underwriting, led to a better alignment of client and reinsurer expectation The supply/demand dynamic was finely balanced but overall buyers managed to secure sufficient capacity Similar to 1 January, the Casualty treaty market remained calm and logical, though continued concern regarding US ‘nuclear’ award verdicts are increasingly coming to light on US casualty placements, including some treaties with incidental US exposures ILS issuance is picking up due to capital constraints in the traditional market, although at higher pricing than traditional indemnity pricing About Gallagher Re One of the world’s largest reinsurance brokers and advisory firms, operating across the risk and capital spectrum, Gallagher Re is part of Gallagher, the global brokerage, risk management and consulting services firm headquartered in Illinois. In December 2021, the acquisition of Willis Re was completed, making Gallagher Re the world’s third-largest reinsurance broker with a team of over 2,600 colleagues trading from more than 70 offices across 31 countries including all the key global reinsurance hubs of North America, Europe and Asia. Source: asiainsurancereview.com

By Herminia S. Jacinto THE Philippine insurance industry welcomes Atty. Reynaldo Regalado as its new insurance commissioner. He replaces Commissioner Dennis V. Funa who completed his six-year term last December 2022 but was in holdover position until the appointment of his successor. Commissioner Funa — lawyer, book author and professor of law — was appointed by former president Duterte in December 2016 for a term of six years without reappointment as provided for in the Insurance Code of the Philippines. Atty. Funa leaves the insurance industry with a record breaking growth in premiums, assets, net income and net worth of the companies from 2016 to 2022. It was during his term that the minimum net worth requirement of P900 million and P1.3 billion as of the years 2017 and 2022, respectively, were implemented and complied with. As of this writing, only a few of the active life and non-life companies are still in the process of complying with the net worth requirements. Total assets of the industry as of year end 2022 amounted to P2 trillion, 85 percent of which are in invested assets. I believe, however, that the most notable accomplishment of Funa's term is the efficient and fast handling of Covid claims. With his leadership and supervision, the insurance industry delivered on its mission of service to the insuring public. Many of the circular letters issued by his office in 2020 were in response to the Covid-19 pandemic. Several initiatives and projects started during his term like the implementation of the IFRS 17 in 2025 with a parallel run in 2024 will be inherited by the next commissioner. The World Bank has also required insurance companies to submit their Own Risk and Solvency Assessment (ORSA) by June 2023. Hearings on the revision of rates of catastrophic risks are still to be scheduled by the Congress. The incoming commissioner need not worry about these pending issues. The industry associations, the Philippine Life Insurance Association (PLIA) and the Philippine Insurers and Reinsurers Association (PIRA), and the Insurance Commission staff are working together to finish all these requirements. Atty. Regalado is no stranger to public service having served as head of the Philippine Overseas Employment Administration in 1998 to 2001 and was the labor attaché to Japan in 1993 to 2004 and in South Korea in 2005 to 2006. He is an alumnus of the University of the Philippines School of Economics and College of Law. Welcome to the insurance industry, Commissioner Rey Regalado! Source: manilatimes.net

Vessels are exposed to higher fire risks caused by many issues including increased shipments of highly combustible lithium batteries. However, vessels may lack adequate firefighting resources and this could lead to severe damage and losses. “There is a bigger risk of fire on vessels, especially on container carriers and car carriers. There are various factors driving this. Misdeclaration of cargo continues, where dangerous cargo is declared as non-dangerous cargo,” said said Chubb Asia Pacific marine head of transportation risk management Sivakumaran Divakaran speaking to Asia Insurance Review. He said that vessels have also increased in size. However, such vessels remain insufficient and unable to cope amid an increase in dangerous cargo shipments, especially those carrying lithium batteries. “In particular, on car carriers, there is an increase of EV shipments, but existing fire-fighting capabilities are not effective in extinguishing electric vehicle fires,” he said. Supply chain risks The marine industry remains threatened by conflicts and natural catastrophes around the world. Captain Divakaran said that ongoing geopolitical tensions and Russia president Vladimir Putin’s invasion of Ukraine could lead to supply chain disruptions. “Trade wars could lead to cargo detention, rejection, re-routing, all of which increases risk exposure,” he said. “National catastrophe related events, including tropical storms, hurricanes and typhoons are reportedly getting more powerful and of higher intensity and can lead to more losses both at sea (cargo on vessels) and on land (cargo in transit or storage). Examples include containers or cargo being lost overboard or damaged, cargo movements due to violent vessel motion, floods at ports, warehouses or windstorm damage to warehouses,” he said. Improving the claims process Marine insurers like Chubb settle straightforward lower value claims (where all relevant supporting documents are provided) within one to two days according to Captain Divakaran. For more complex claims, a loss adjuster is appointed to report on the circumstances of the incident, ensure salvage and recovery rights are maximized and enable the insurer’s claims handler to settle the claim as soon as possible within the terms of the marine insurance coverage. However, better understanding between insurers, clients and brokers is needed to improve the claims process. “The broker plays a role in managing the client’s expectations and guiding the client through the claim process. For generalist brokers who do not have extensive experience in marine they should work with their marine insurer to clarify any coverage issues or potential roadblocks as early as possible and work through the process together. Effective communication between the broker, insurer and client goes a long way to avoiding claims going off the rails,” he said. Source: asiainsurancereview.com

The Insure Our Future network has asked the CEOs of 30 major insurance companies to stop offering insurance services for fossil fuels. In an open letter addressed to major global insurers, which include AIG, Allianz, AXA, Chubb, Generali, Liberty Mutual, Lloyd’s of London, Munich Re, SCOR, Sinosure, SOMPO, Tokio Marine and Zurich, the network has raised six demands for the insurance industry. The network includes national and global organizations and social movements. The letter outlines insurers’ critical role in the climate crisis and concrete actions they must take if they are serious about supporting the global goal of limiting climate change to 1.5°C. The six demands made include: 1. Immediately cease insuring new and expanded coal, oil, and gas projects. 2. Immediately stop insuring any new customers from the fossil fuel sector which are not aligned with a credible 1.5ºC pathway, and stop offering any insurance services which support the expansion of coal, oil and gas production at existing customers. Within two years, phase out all insurance services for existing fossil fuel company customers which are not aligned with such a pathway. 3. Immediately divest all assets, including assets managed for third parties, from coal, oil, and gas companies that are not aligned with a credible 1.5ºC pathway. 4. By July 2023, define and adopt binding targets for reducing your insured emissions which are transparent, comprehensive and aligned with a credible 1.5ºC pathway. 5. Immediately establish, and adopt as policy, robust due diligence and verification mechanisms to ensure clients fully respect and observe all human rights, including a requirement that they obtain and document the free, prior and informed consent of impacted indigenous peoples as articulated in the UN Declaration on the Rights of Indigenous Peoples. 6. Immediately bring stewardship activities, membership of trade associations and public positions as a shareholder and corporate citizen in line with a credible 1.5ºC pathway in a transparent way. Some insurers have, however, said that they are engaging their energy sector customers in a dialogue about the net zero transition and that this can encourage them to transition faster than excluding them from their insurance and investment portfolios. But according to the network major oil and gas producers show no signs of adopting credible net zero pathways and some have recently even walked back the weak commitments they have made in the past, despite their recent obscene record profits. Source: asiainsurancereview.com

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The EU-ASEAN Business Council (EU-ABC), an advocacy organization representing the interests of European businesses operating in Southeast Asia, has made several recommendations for ASEAN insurance regulators relating to digital access to protection, a growth-oriented regulatory environment, transition towards a low-carbon economy and de-risking green investments. The recommendations are set out in a position paper titled “ Realizing Inclusive and Sustainable Growth in ASEAN: The Role of Insurance”. This spells out the insurance industry’s crucial role in achieving inclusive and sustainable growth in ASEAN – in line with the theme of Indonesia’s chairmanship of ASEAN in 2023 – “ASEAN Matters: Epicentrum of Growth”. The paper was launched ahead of EU-ABC’s annual consultation meeting with the ASEAN Finance Ministers and central bank governors yesterday. The key recommendations outlined in the position paper are: Regulatory framework The paper also stresses the importance of a growth-orientated regulatory framework to extend insurance penetration rates. It encourages ASEAN regulators to draft regional guidelines on the supervision of digital insurance and introduce relevant local rules to improve consumers’ digital access to insurance. As ASEAN makes moves to transition to a low-carbon economy, the paper also urges policymakers to consider how to work with the insurance sector on the financing of climate change mitigation action. The paper specifically notes that “realizing inclusive and sustainable growth in ASEAN requires strong commitments and joint efforts from all stakeholders. Insurers, with triple roles as risk managers, risk carriers and investors, have a vital role to play in the process.” Commenting on the EU-ABC’s recommendations set out in the paper, Mr. Chris Humphrey, executive director at the EU-ABC, said in a statement yesterday, “Insurance is crucial for the economic development of ASEAN countries, providing individuals and businesses with financial protection against risks and uncertainties, as well as being a source of long-term development financing. This paper today from the EU-ABC provides clear recommendations for regulators and governments across ASEAN which, if adopted, would help the insurance sector play a clear role in realizing inclusive and sustainable growth in the region.” The statement also said, “The EU-ABC stands ready to continue our collaboration with governments, communities as well as other stakeholders as we are all jointly committed to realizing inclusive and sustainable growth in ASEAN.” Source: asiainsurancereview.com

Ms. Vangie Capili, Chairperson of the Surety Committee at PIRA Office  March 30, 2023.