We are delighted to announce that the 30th EAIC Hong Kong Conference 2024 will take place between 24 and 27 September 2024. We are excited to share more details with you in due course. Meanwhile, please save the date in your calendar and we look forward to welcoming you in Hong Kong 18 months from now, if not sooner.

The net income of the insurance market in the Philippines dipped by 2.25% to PHP46.68bn ($859m) in 2022 from PHP47.75bn, data released by the Insurance Commission (IC) show. The figure is derived from submissions to the IC by life insurers, non-life insurers and mutual benefit associations. Although the total number of such entities was 134, the data from the IC are based on unaudited reports from 128 entities. The companies reported a combined premium income of PHP379.23bn in 2022, 1.22% higher than the PHP374.67bn posted in 2021. Benefits paid by the industry declined by 2.26% year on year to PHP136.62bn in 2022. The following table summarizes the financial performance of the three segments of the insurance industry in the Philippines: Source: asiainsurancereview.com

The Insurance Commission (IC) and the Bangko Sentral ng Pilipinas (BSP), in cooperation with the Philippine Insurers and Reinsurers Association (PIRA) and the Philippine Life Insurance Association (PLIA), invite you to the a digital presentation on March 31, 2023, Friday at 10:00am via ZOOM.

A new report by Global Federation of Insurance Associations (GFIA) has identified and quantified the most significant - and growing - annual global protection gaps: $1tn for pensions; $900bn for cyber; $800bn for health and $100bn for natural catastrophes. The 115-page report identifies the factors driving these protection gaps both on the demand and the supply side, including why certain risks can be very difficult to insure completely. The report also provides an overview of the wide range of potential levers that can be used by a broad variety of stakeholders to address the gaps. GFIA president Susan Neely said, “Insurers around the world play a vital role in helping to protect people and businesses from the risks they face, and to recover when those risks materialize.” The report highlights that a range of factors have led to huge and growing global protection gaps that could have profound impacts on people’s lives and livelihoods. Ms. Neely said, “Insurers can, and are, taking steps to address these gaps. These include using technology to assess risks and claims, and to make insurance more accessible for people and businesses. However, closing the gaps will also require action from policymakers to create environments in which risks can be managed and mitigated. These actions will help keep risks insurable and insurance protection affordable.” The report uses several case studies to demonstrate the private and/or public policy actions that have been taken to reduce protection gaps. It also includes GFIA’s own recommendations to policymakers of the best levers to use to reduce risk and increase protection. The report makes clear the steps that are needed to reduce the protection gaps and to help people. The report includes GFIA’s own recommendations to policymakers of the best levers to use to reduce risk and increase protection. Source: asiainsurancereview.com

By Nick Carey, Paul Lienert and Sarah McFarlane LONDON/DETROIT (Reuters) -For many electric vehicles, there is no way to repair or assess even slightly damaged battery packs after accidents, forcing insurance companies to write off cars with few miles - leading to higher premiums and undercutting gains from going electric. And now those battery packs are piling up in scrapyards in some countries, a previously unreported and expensive gap in what was supposed to be a "circular economy." "We're buying electric cars for sustainability reasons," said Matthew Avery, research director at automotive risk intelligence company Thatcham Research. "But an EV isn't very sustainable if you've got to throw the battery away after a minor collision." Battery packs can cost tens of thousands of dollars and represent up to 50% of an EV's price tag, often making it uneconomical to replace them. While some automakers like Ford Motor Co and General Motors Co said they have made battery packs easier to repair, Tesla Inc has taken the opposite tack with its Texas-built Model Y, whose new structural battery pack has been described by experts as having "zero repairability." Tesla did not respond to a request for comment. A Reuters search of EV salvage sales in the U.S. and Europe shows a large portion of low-mileage Teslas, but also models from Nissan Motor Co, Hyundai Motor Co, Stellantis, BMW, Renault and others. EVs constitute only a fraction of vehicles on the road, making industry-wide data hard to come by, but the trend of low-mileage zero-emission cars being written off with minor damage is growing. Tesla's decision to make battery packs "structural" - part of the car's body - has allowed it to cut production costs but risks pushing those costs back to consumers and insurers. Tesla has not referred to any problems with insurers writing off its vehicles. But in January CEO Elon Musk said premiums from third-party insurance companies "in some cases were unreasonably high." Unless Tesla and other carmakers produce more easily repairable battery packs and provide third-party access to battery cell data, already-high insurance premiums will keep rising as EV sales grow and more low-mileage cars get scrapped after collisions, insurers and industry experts said. "The number of cases is going to increase, so the handling of batteries is a crucial point," said Christoph Lauterwasser, managing director of the Allianz Center for Technology, a research institute owned by Allianz. Lauterwasser noted EV battery production emits far more CO2 than fossil-fuel models, meaning EVs must be driven for thousands of miles before they offset those extra emissions. "If you throw away the vehicle at an early stage, you've lost pretty much all advantage in terms of CO2 emissions," he said. Most carmakers said their battery packs are repairable, though few seem willing to share access to battery data. Insurers, leasing companies and car repair shops are already fighting with carmakers in the EU over access to lucrative connected-car data. Lauterwasser said access to EV battery data is part of that fight. Allianz has seen scratched battery packs where the cells inside are likely undamaged, but without diagnostic data it has to write off those vehicles. Ford and GM tout their newer, more repairable packs. But the new, large 4680 cells in the Model Y made at Tesla's Austin, Texas, plant, are glued into a pack that forms part of the car's structure and cannot be easily removed or replaced, experts said. In January, Tesla's Musk said the carmaker has been making design and software changes to its vehicles to lower repair costs and insurance premiums. The company also offers its own insurance product in a dozen U.S. states to Tesla owners at lower rates. Insurers and industry experts also note that EVs, because they are loaded with all the latest safety features, so far have had fewer accidents than traditional cars. 'STRAIGHT TO THE GRINDER' Sandy Munro, head of Michigan-based Munro & Associates, which tears down vehicles and advises automakers on how to improve them, said the Model Y battery pack has "zero repairability." "A Tesla structural battery pack is going straight to the grinder," Munro said. EV battery problems also expose a hole in the green "circular economy" touted by carmakers. At Synetiq, the UK's largest salvage company, head of operations Michael Hill said over the last 12 months the number of EVs in the isolation bay – where they must be checked to avoid fire risk - at the firm's Doncaster yard has soared, from perhaps a dozen every three days to up to 20 per day. "We've seen a really big shift and it's across all manufacturers," Hill said. The UK currently has no EV battery recycling facilities, so Synetiq has to remove the batteries from written-off cars and store them in containers. Hill estimated at least 95% of the cells in the hundreds of EV battery packs - and thousands of hybrid battery packs - Synetiq has stored at Doncaster are undamaged and should be reused. It already costs more to insure most EVs than traditional cars. According to online brokerage Policygenius, the average U.S. monthly EV insurance payment in 2023 is $206, 27% more than for a combustion-engine model. According to Bankrate, an online publisher of financial content, U.S. insurers know that "if even a minor accident results in damage to the battery pack ... the cost to replace this key component may exceed $15,000." A replacement battery for a Tesla Model 3 can cost up to $20,000, for a vehicle that retails at around $43,000 but depreciates quickly over time. Andy Keane, UK commercial motor product manager at French insurer AXA, said expensive replacement batteries "may sometimes make replacing a battery unfeasible." There are a growing number of repair shops specializing in repairing EVs and replacing batteries. In Phoenix, Arizona, Gruber Motor Co has mostly focused on replacing batteries in older Tesla models. But insurers cannot access Tesla's battery data, so they have taken a cautious approach, owner Peter Gruber said. "An insurance company is not going to take that risk because they're facing a lawsuit later on if something happens with that vehicle and they did not total it," he said. 'PAIN POINTS' The British government is funding research into EV insurance "pain points" led by Thatcham, Synetiq and insurer LV=. Recently adopted EU battery regulations do not specifically address battery repairs, but they did ask the European Commission to encourage standards to "facilitate maintenance, repair and repurposing," a commission source said. Insurers said they know how to fix the problem - make batteries in smaller sections, or modules, that are simpler to fix, and open diagnostics data to third parties to determine battery cell health. Individual U.S. insurers declined to comment. But Tony Cotto, director of auto and underwriting policy at the National Association of Mutual Insurance Companies, said "consumer access to vehicle-generated data will further enhance driver safety and policyholders' satisfaction ... by facilitating the entire repair process." Lack of access to critical diagnostic data was raised in mid-March in a class action filed against Tesla in U.S. District Court in California. Insurers said failure to act will cost consumers. EV battery damage makes up just a few percent of Allianz's motor insurance claims, but 8% of claims costs in Germany, Lauterwasser said. Germany's insurers pool data on vehicle claims data and adjust premium rates annually. "If the cost for a certain model gets higher it will raise premium levels because the rating goes up," Lauterwasser said. (Reporting by Nick Carey and Sarah McFarlane in London, Paul Lienert in Detroit, Gilles Guillaume in Paris and Giulio Piovaccari in MilanAdditional reporting by Victoria Waldersee in BerlinEditing by Ben Klayman and Matthew Lewis)

The hard market in (re)insurance is expected to continue, based on increased demand for coverage and because of inflation-driven higher values of insured assets, says Swiss Re Institute (SRI) in a new report. In its sigma report titled “Natural catastrophes and inflation in 2022: a perfect storm”, SRI says that current supply-side stresses also underpin the hard market. For one, industry capital has fallen in response to rising interest rates. Adding to capacity shortages, six years of weak results in property underwriting have reduced risk appetite. In the face of higher financing costs given interest rate rises, some capacity providers have become more cautious with respect to the potential for misalignment of risk assessment and loss experience. SRI said in the report, “In our view, as higher exposures encounter shrinking risk appetite, momentum for rising prices, higher retentions and tighter terms and conditions will likely continue. “ Property catastrophe re/insurance rates rose to 20-year highs in the January 2023 renewals, continuing a trajectory that began in 2018, says the report. Demand for covers has grown as natural disasters continue to wreak property damage across the world. Natural disasters resulted in global economic losses of $275bn in 2022, of which $125bn were covered by insurance, the fourth highest one-year total on sigma records. Beyond the natural catastrophes themselves, other factors such as the impacts of economic inflation and financial market losses have also fed into market hardening. An additional contributing factor has been the need for more discipline in the modelling and underwriting of secondary perils in particular. This has led to mismatches of risk assessment and actual exposures and, in turn, insufficient market capacity. Economic factors remain the main driver of rising losses The 2022 insured loss outcome reaffirms a 5?7% annual growth trend in place since 1992, this is based mostly on the rising severity of losses resulting from primary and secondary peril events. Today average annual insured losses of more than $100bn are standard. The biggest loss event in 2022 was Hurricane Ian (estimated insured loss of $50?65bn). Other large-loss events were floods in Australia and South Africa, hail in France, winter storms in Europe, and heatwaves in Europe, China and the Americas Rather than the physical destructive force of natural catastrophes themselves, the main drivers of resulting high losses are economic growth, accumulation of asset values in exposed areas, urbanization and rising populations, often in regions susceptible to natural perils. SRI expects that these and the evolution of a range of present-day risk factors like climate change effects and, of late, inflation, will continue to drive losses higher. Economic inflation has surged over the last two years, averaging 7% in the advanced markets and 9% in the emerging economies in 2022. Initially sparked by pandemic-induced supply chain disruptions and large monetary and fiscal stimuli, soaring food and energy prices due to the war in Ukraine have compounded inflation pressures. The effect of high prices has been to increase the nominal value of buildings, vehicles and other insurable assets, in turn pushing up insurance claims for damage caused by mother nature. The impact has been most immediate in the construction sector. Increases in the costs for materials and labour because of shortages thereof have led to higher claims to cover the costs of building repairs. SRI points out that the associated losses of secondary perils have been rising for many years. There is a need for greater discipline in the monitoring of the loss-driving secondary peril exposures and industry sharing of related findings. Lack of granular exposure data can also hinder understanding of all present-day risks. Source: asiainsurancereview.com

Despite US insurance companies' minimal exposure to bonds issued by the now-shuttered Silicon Valley Bank (SVB), the failure highlights for insurers the importance of managing enterprise, asset-liability and liquidity risks, according to an AM Best commentary. Mr. Jason Hopper, associate director of industry research and analytics at AM Best, in remarks carried in the Best’s Commentary, “SVB Collapse Highlights Critical Lessons for the Insurance Industry”, said, “Many insurers depend on banks for operational aspects, but generally are not as vulnerable to bank run-on scenarios, although they can occur as we’ve seen in the past and emphasize the importance of a robust risk management structure, especially for annuity writers in a rising interest rate environment.” “Insurers that conduct detailed analysis on the impact of rising interest rates on their asset-liability portfolios and manage their impacts through capital and other risk management tools will fare better in those events than those that are less well-managed,” he added. SVB catered primarily to higher-risk tech startups, which have been hurt by higher interest rates and dwindling venture capital. As interest rates rose the past year, financially strapped venture capital firms found it more difficult to access funding, and many pulled their deposits from the bank. The commentary notes that had the US government not stepped in to make all depositors whole, underwriters of directors and officers insurance for startups and venture capitalists, as well as the financial institution insureds supporting such entities, could have faced financial distress given that they are operating on very thin capital. “Since startups are by nature much more agile and less risk-averse than other companies, their directors and officers often make decisions quickly,” said Mr. David Blades, associate director, industry research and analytics, at AM Best. “Therefore, the potential for D&O claims for startups would have been high in the case government had decided not to help the depositors.” Just eight US insurers have bond exposures greater than 2% of their capital and surplus, with the maximum being less than 5%. Whether these bonds will become impaired remains to be seen. The ramifications for equity portfolios could be more significant, according to the commentary, as some major bank stocks already have lost significant value. Five US insurers have equity exposures concentrated in the broader bank and trust sector greater than their capital, and 17 have exposures totalling at least half their capital. Source: asiainsurancereview.com

By Michael F. Rellosa PEOPLE may not be aware that there is an ongoing issue on the recent decision of the Insurance Commission to temporarily shelve the implementation of IC Circular 2022-34, dated July 14, 2022, correcting the minimum catastrophe insurance rates from 0.15 percent to 0.2 percent, supposedly to take effect from January 2023. This has been in turn spurred by a congressional inquiry into the reasons behind it. This threw the industry into an unprecedented crisis relative to the renewal of their reinsurance treaties for the year. The detrimental effects of this temporary suspension, include but are not limited to: 1. The further delay in the technical correction of a rate that has not been reviewed and updated in over a decade. Such a correction will make this class of insurance more sustainable. Scientists and experts the world over have been sounding alarm bells on climate change and the resultant exacerbation of "nat cat" (natural catastrophe) events such as typhoons and floods. Even ordinary weather occurrences such as thunderstorms and monsoon rains can have catastrophic results due to the inordinate quantity of moisture that it can carry and thus the huge amount of rain that it unleashes. The Philippines is now considered the most vulnerable nation to catastrophic events such as typhoons, floods and earthquakes, the very coverages that nat cat insurance protects against. It may happen that if local insurers are unable to get the protection it needs via reinsurance, then they may be forced not to offer the very protection that the country needs at this point. The government should closely look into this as they are the ultimate risk takers and insurers post-calamity. The government should realize that the insurance industry helps cushion the blow and are its partners if it is allowed to sustainably write this kind of business. 2. It sends a wrong signal to the international reinsurance market on whom the Philippine insurance industry is heavily reliant on. Major reinsurers are correcting their own rates, while we are unable to adjust our own due to the temporary stay of the Insurance Commission. They now view the Philippines as an unsustainable risk, resulting in their imposing higher reinsurance protection costs, or pulling out their facility altogether. As a matter of fact, even the Philippine Catastrophe Insurance Facility so painstakingly cobbled together by the regulators and the industry over several years has been jeopardized. Again, the protection it expects to be able to obtain from the global reinsurance market at prices already using the new adjusted rates are not attracting any takers. We hope and pray that the congressional inquiry ends soon and that both branches of government, legislative and executive, are on the same page on the need to have ready coverage for nat cat events. A coverage that our populace badly needs in the face of climate change and the exacerbation of the strength and frequency of typhoons and floods, as well as protection against the loss or damage that a major earthquake can bring, bearing in mind our being situated within the Pacific Ring of Fire. We should take notice of such events happening around the world and even in the Philippines. Statistics do not lie and the trends are there for all to see. Such events are increasing, and we must prepare for them. Anything that prolongs the availability of this type of protection puts all our efforts in helping create a resilient Philippines in jeopardy. I end with an appeal for an all-of-society approach to addressing this issue. Let us ferret out the truth and see the bigger picture. Let science and the accumulated knowledge of actuaries, mathematicians, underwriters, geologists, hydrologists, climatologists and other experts involved in this, guide us and our decisions. In the end we only have one country, and we all share the desire to protect it and its people going forward. Source: manilatimes.net

The Finance Committee held a first face to face meeting for the year 2023. Ms. Joli Co Wu, Chairperson, Paramount Life & Gen. Ins. Ms. Marcelina F. Valles, Philippine British Assurance Co., Inc. Ms. Alegria R. Castro, AIAP Ms. Merlina P. Mendoza , BPI/MS Mr. Jeffrey R. Lacson, Pacific Cross International Mr. Santino U. Sontillano, NatRe Mr. Wilfredo V. Morales, Pioneer Insurance & Surety Corp. Mr. Frederick T. Pineda, Malayan Insurance Ms. Cristina C. De Guzman, Resource Person, Pioneer Insurance & Surety Corp. Mr. Michael F. Rellosa, PIRA Executive Director

Arrowing protection gaps has become even more important due to the rise in recent years of four global mega trends that affect them either directly or indirectly, according to the Switzerland-based Global Federation of Insurance Associations (GFIA). In a report titled “Global protection gaps and recommendations for bridging them”, GFIA says that the mega trends cause dynamic changes in the risk landscape, giving rise to new, rapidly increasing risks and reinforcing existing ones, thereby affecting global protection gaps. The four mega trends are climate change, technological acceleration and the use of data; changing demographics leading to ageing populations, and disruptive developments in macroeconomics and politics. Four protection gaps that are particularly relevant due to their size, global presence, impact on lives and livelihoods, and expected evolution, are: Pension protection gap ($1tn annual gap) Cyber protection gap ($0.9tn) Health protection gap ($0.8tn) Natural catastrophe protection gap ($0.1tn) GFIA says that it has produced the report to promote greater understanding of the largest protection gaps faced by individuals, businesses and societies globally. The report examines the drivers of the most relevant protection gaps and provides an overview of the wide range of potential levers that could help reduce each of the gaps. Pension protection gap — growth exacerbated by demographics GFIA defines the pension protection gap as the difference between the savings needed to sustain a reasonable standard of living (65-70% income replacement) for the next generation of retirees and the currently projected inflows into the system. The cumulative pension gap is approximately $51tn today (excluding pay-as-you-go pension payments and disbursements). Converting this amount into an annuity over 40 years (ie, a typical work-life duration) to identify the annual protection gap, the global pension gap is estimated at $1tn annually. The global share of people over 65 grew from 6.8% in 2000 to 9.3% in 2020, increasing the demand for pension disbursements. Given that pension needs are likely to continue to grow faster than the available funds, the gap will further increase, especially because decreasing investment returns are expected to hit pension schemes worldwide. Cyber protection gap — risks are growing in frequency, severity and variety Insurers currently only cover approximately $6bn in paid claims annually, with the USA being the largest cyber insurance market, accounting for roughly 70% of global cyber GWP. Although increased loss ratios in recent years have made insurers reconsider their cyber underwriting policies and risk appetite, the supply of cyber insurance in terms of GWP is growing and is expected to reach $13-25bn by 2025. With the increase in the adoption of technology and digitization, annual economic losses from cyber incidents are estimated at over $0.9tn, having seen substantial growth in 2020 as a result of the COVID-19 pandemic. However, due to the small share of insured losses, the estimated protection gap remains at approximately $0.9tn. Health protection gap — particularly prevalent in developing economies The health protection gap can be estimated by looking at stressful out-of-pocket (OOP) health expenditure and estimated avoided costs. It is valued at $0.8tn to $4tn annually. The lower end of this range only includes stressful OOP health expenditure, which represents a narrower definition of the gap and is particularly relevant in emerging markets. The higher end of the range also includes estimated avoided costs, which represent the largest share of the health protection gap at up to $3.4tn (although these costs are difficult to quantify as they are not officially reported). Looking at the geographical distribution of the gap in more detail, there are significant differences: upper-middle-income countries constitute approximately 73% of the gap ($2.9tn), while low- and lower-middle-income countries constitute approximately 14% or $0.6tn. The rest of the gap is split between the USA, at approximately 7% ($0.3tn), and the EU, the UK, Canada and Australia (6%, $0.2tn). The growth in the gap shows no sign of slowing, as the decrease in the share of OOP spending in most emerging markets does not seem to be fast enough to address the issue, especially because the populations and the middle classes in those countries continue to grow. Nat CAT protection gap — accelerated by climate change The current Nat CAT protection gap is estimated based on the economic losses from Nat CATs currently not covered by insurance. Nat CAT losses have increased by an average of 5% a year over the last 50 years. In absolute numbers, average annual Nat CAT losses increased from $126bn between 1990 and 1999 to $219bn between 2010 and 2020. While the average share of insured losses increased between 1990 and 2000, the average share of insured losses was approximately 22%, compared with 33% between 2010 and 2020), this has not been sufficient to decrease the Nat CAT protection gap in absolute numbers. The current Nat CAT protection gap stands at roughly $139bn per annum. The report contains GFIA’s recommendations to policymakers regarding the actions that can have the largest potential impact on global protection gaps. The levers can help to address the protection gaps in different ways, including preventing risks from materializing, improving access to insurance or using regulatory standards and frameworks. Click here to access the report. Source: asiainsurancereview.com