Aon, a leading global professional services firm, yesterday announced the implementation of the Open Exposure Data (OED) Standard for the risk modelling of property reinsurance placements. Led by Aon and reinsurers RenaissanceRe, SCOR, Hannover Re and Swiss Re, and curated by Oasis, the OED Standard is a non-commercial venture designed to test and support the hypothesis that open data standards in risk modelling are more effective than proprietary and commercial standards in terms of improving operational efficiency, reducing costs and increasing transparency and consumer choice. The OED Standard will also lower barriers of entry for model developers – including commercial vendors, third-party data providers and academia and other research institutions. Initial testing on reinsurance placement data for Japan, Australia and China has proved highly successful as the initiative broadens its area of focus, says Aon in a statement. Mr. Dan Dick, executive managing director and global head of property analytics for Aon’s Reinsurance Solutions, said, “Aon is proud to be part of this important initiative, which will serve to help reduce volatility in data assumptions, improve consistency in modelled output and increase the operational resilience of our clients and markets. This announcement exemplifies the ways in which our industry is making a positive impact in our communities and for our fellow citizens, by collaborating and focusing on critical issues where we can apply our energy and expertise to make a meaningful difference by informing better decisions.” The re/insurance industry collaboration is designed to promote equality and inclusion when accessing critical risk information, allowing communities globally to become more risk-aware and risk-informed, while improving their resiliency and ability to save lives. The OED Standard for property and extension to cyber and casualty risks, is helping to drive further innovation in the risk modelling space. Its benefits include: One consistent, community-owned market standard for catastrophe risk data. A significant reduction of resource strain in data processing and formatting. An improvement in high-quality data transfer between users of multiple models and systems. Better access to credible risk management data for underserved and disadvantaged communities. An overall enhancement in the digitalization of the insurance industry. Improved risk perspective through less reliance on any particular model developer. Mr. Paul Nunn, head of Sustainable Insurance, SCOR, commented, “The success of this data standards initiative typifies the enormous drive and desire of our commercial and non-commercial partners to invoke meaningful and positive change through greatly improved ‘open’ and ‘easy’ exchange of critical risk information. No doubt this will greatly advance our common goal of helping to continuously advance societal resilience globally.” The utilization of an industry-wide standard for property risk reinsurance models aims to assist with solving the existing data and model interoperability challenges in the re/insurance market. Mr. Martin Bertogg, head of Cat Perils, Cyber and Geo at Swiss Re, said: “Globally shared data formats are an important step to overcome barriers for consistency, processing efficiency and a transparent cat risk dialogue. Our industry has an urgent need to take out non-value-adding friction from its production chain.” Mr Jörg Steffensen, general manager, Group Risk Management at Hannover Re, added, “The new OED Standard enables not only a close interoperability between different risk stakeholders but also supports a wide field of open source projects in academia.” He added, “The new standard is a major step forward in creating more resilience to natural catastrophes around the world and closing the protection gap.” Executive members of the OED Standard project comprise: Martin Bertogg, Head of Cat Perils, Cyber & Geo; Managing Director at Swiss Re Institute Ian Branagan, EVP & Group Chief Risk Officer at RenaissanceRe Peter Cheesman, Head of APAC Analytics – Reinsurance Solutions at Aon Sean Ringsted, EVP, Chief Digital Business Officer & Chief Risk Officer at Chubb Group Jörg Steffensen, General Manager, Group Risk Management – Modelling at Hannover Re Paul Nunn, Head of Sustainable Insurance, SCOR Dickie Whitaker, Chief Executive, Oasis Loss Modelling Framework Source: asiainsurancereview.com

Every dollar spent on pre-disaster risk reductions saves between $6 and $13 in damages, however, 88% of disaster management funds are allocated to post-event response. Guy Carpenter global head of public sector risk solutions Julian Enoizi, in an article published as a part of World Economic Fund 2023 annual meeting at Davos, said the year 2022 saw a great many extreme weather events, including hurricane Ian in Florida, unprecedented flooding in Pakistan and extreme heatwaves in the UK. In his article Mr. Enoizi indicates how the emphasis on disaster recovery rather than prevention and mitigation continues the cycle of recovering from disasters as opposed to investing in preparations for the next disaster to minimize hardship. He said there is a need for building resilience to these types of physical threats before they take place. Mr. Enoizi writes, “There is ample opportunity for creative climate adaptation solutions to mitigate the worst consequences of climate change and rebalance efforts towards proactive adaptation. That is why one of the 2022 UN Climate Conference’s (COP 27) main goals was to scale-up adaption efforts through the UN’s Race to Resilience campaign. “As society’s risk manager, the global insurance industry is critical in ensuring resilience to a hotter, more volatile planet. As a start, individual actions reducing individual risks are crucial. But by their very nature, climate-related risks are systemic – think rising sea levels threatening entire communities or extreme heat waves making a city uninhabitable – and therefore, demand systemic or community-wide solutions.” Other community-level changes also contribute to climate resilience. For example, according to a recent study by Federal Emergency Management Agency, hazard-resistant building codes could help prevent at least $3.2bn a year in weather-related losses by 2040. Evidence of the success of this approach includes Babcock Ranch, a community built to withstand more frequent and intense storms, which sustained no significant damage after hurricane Ian despite being 15 miles from Fort Myers, Florida. Source: asiainsurancereview.com

Australian Reinsurance Pool Corporation (ARPC) has announced that effective 1 January 2023, the Sure Insurance brand has joined the Cyclone Reinsurance Pool (cyclone pool) as an insurer customer through their product issuers Liberty Mutual Insurance Company, Australia Branch, trading as Liberty Specialty Markets, and Pacific International Insurance. Sure Insurance is a managing general agency underwriting policies on behalf of their product issuers Liberty Mutual Insurance Company, Australia Branch, trading as Liberty Specialty Markets, and Pacific International Insurance. Sure is participating in the pool for household and residential strata insurance, reported insuranceNEWScom.au. Another insurer in the pool is Allianz which joined on 1 January this year as well but for home insurance only. The cyclone pool is a reinsurance arrangement between insurer customers and ARPC. The cyclone pool covers household, strata, and small business property insurance policies. ARPC commenced operating the cyclone pool from 1 July 2022. The cyclone pool operates Australia-wide, but targets support to cyclone-prone areas, and provides reinsurance for insurers operating in those areas. The cyclone pool has been designed to reduce insurance premiums for households, small businesses, and residential and commercial strata, with medium-and-high cyclone and related flood damage risk. The pool is backed by a A$10bn ($7b) government guarantee and managed by Australian Reinsurance Pool Corporation. Source: asiainsurancereview.com

Extreme weather events caused upwards of EUR158bn ($171bn) in damages in 2022. A study by development agency Christian Aid found that tangible global economic losses came to $168bn but the true cost outside of insurance-based calculations was likely to be much higher. The report said that the drought caused by the extreme heat across Europe during the summer was likely to have cost EUR20bn and 20,000 deaths in excess of normal, with wildfires and agricultural losses particularly acute. Pakistan’s floods killed 1,700, displaced another 7m people from their homes and caused EUR30bn in damage, according to World Bank estimates. However, just EUR5.6bn of that damage was recoverable from insurance. Hurricane Ian in September 2022 caused around EUR100bn in damages to the US and Cuba, with more than 30,000 people evacuated. The fifth-strongest hurricane ever to hit the US led to 130 deaths, was the strongest to hit Florida in 87 years and the costliest in the past 30 years. The Caribbean was ravaged by hurricane Fiona in the same month, leaving 90% of Puerto Rico without electricity and killing eight. In the Dominican Republic, some 13,000 people were displaced, 40,000 people were affected by power outages and nearly 1.2m people experienced water supply issues. It said that island nations are those suffering most from the fallout of climate change, despite being among the least responsible for the human-induced greenhouse gas emissions that are driving temperature rises in recent decades. Brazil experienced its third dry year in a row, leaving one of the world’s biggest breadbaskets exposed to large agricultural losses. Coffee, soy and corn crops were particularly badly affected. The Horn of Africa, encompassing parts of Kenya, Somalia and Ethiopia, remains in the clutches of a four-year-long drought affecting 36m people according to the UN Office for the Coordination of Humanitarian Affairs. It has been described as ‘the worst in 40 years’, and the ongoing lack of rain has caused crop failures and the death of more than 3m million livestock. Source: asiainsurancereview.com

Losses from natural disasters in the Asia-Pacific region increased to approximately $70bn in 2022 with insured losses rising to around $10bn, according to Munich Re’s Nat CAT report 2022. By Ahmad Zaki In Asia, industrialized countries accounted for a high proportion of insured losses, following past trends. Apart from the floods in Australia, an earthquake in Japan were the disasters with the highest insured losses in the region. The 7.4 magnitude earthquake caused overall losses of $8.8bn, of which $2.8bn was insured and was the second costliest natural disaster in the Asia-Pacific region after the floods in Pakistan, which was the year’s second costliest and greatest humanitarian disaster. The flooding in Pakistan resulted from record-breaking monsoon rainfall during the June to October period. In the month of August, rainfall there was between five and seven times heavier than usual. Accelerated glacier melt as a result of the high temperatures significantly increased the flooding. At least 1,700 people were killed. According to the report, direct losses are estimated to be at least $15bn – an enormous amount given the size of the country’s GDP. In China, a protracted heatwave and drought, with temperatures of over 44°C in many parts of the country, led to water shortages and crop failures. The water level in the Yangtze, the longest and economically most important river in the country, receded significantly, as did the levels in many other rivers and reservoirs. In some areas, shipping was suspended and the electricity yield from hydroelectric stations fell drastically. Several large industrial corporations had to temporarily suspend production. According to rough estimates, the damage, including losses from crop failures, could be in the midsingle-digit billions, virtually none of which will have been insured. Global risks ranked by severity over the short and long term “Please estimate the likely impact (severity) of the following risks over a 2-year and 10-year period” Source: World Economic Forum Global Risks Perception Survey 2022-2023 Source: asiainsurancereview.com

Climate change, ESG responsibilities and cyber risks are among the eight major risks that the insurance markets would be facing in 2023 according to the latest annual insurance review report from international law firm RPC. The eight major risks include: 1. Cyber war exclusions: The scope of cyber cover was a hot topic for 2022, with Lloyd’s of London announcing there will no longer be coverage for some state-backed cyber attacks from March 2023. 2. Sustainable insurance and net zero: To tackle the effects of climate change and growing importance of ESG, insurers are refining their business offerings by expanding into the sustainable insurance market. 3. Climate-related natural disasters: Climate change disasters will have a strong impact especially on the reinsurance sector, with catastrophe and other types of reinsurance expected to continue soaring. 4. D&O claims relating to ESG and the recession: With promises of being ESG responsible, corporates and their directors will come under increasing scrutiny, with allegations pertaining to alleged greenwashing gaining increasing prominence. 5. Crypto risks: Insurers are likely to review or amend policy wordings to ensure they are not indirectly insuring losses arising from the activity of insureds who may have involvement in cryptocurrencies. 6. Construction claims: Companies going under, general interest rate rises, supply chain pressures and demand for labour are the highest risk for construction sector insurers in 2023. 7. Health and safety: It is only a matter of time before prosecutions for causing work-related stress occur against organizations that have not prioritized mental health and supporting their workforce. 8. Claims against professional advisers in the property market: 2023 could be a rocky year for estate agents, property managers and rental companies as the economic recession pushes down property prices and increases utility bills. RPC global head of insurance Simon Laird said, “Climate change, ESG, cyber and the continuing conflict in Ukraine remain centre stage for the insurance industry, creating both new opportunities for insurers and new challenges from a claims and coverage perspective. "The headwinds that the economy is creating will also prove a significant challenge. Recessions normally mean more claims against professional advisers. For insurers the challenge is establishing which professions will be most exposed this time around.” Source: asiainsurancereview.com

Companies in Indonesia such as IKEA, Gojek and Shopee are customizing insurance policies to suit the products they sell. It is made possible through developments in technology that have allowed them to collaborate with InsurTechs and underwriters to create policies for their customers. A week ago, PasarPolis claimed it has become Indonesia's first official full-stack InsurTech ecosystem, which gives the company the ability to both distribute and underwrite its own digital insurance products. This achievement comes after the company sealed a strategic collaboration with local insurer Tap Insurance, which has received a full license from Indonesia’s financial authority (Otoritas Jasa Keuangan) to operate as an insurance underwriter. “This can help accelerate our mission to democratize insurance for all by delivering insurance that is easy to access and affordable for everyone in Indonesia and Southeast Asia, including the uninsured and underserved society members,” said PasarPolis founder and CEO Cleosent Randing speaking to Asia Insurance Review. The InsurTech ecosystem makes use of Tap Insurance’s expertise and capacity to underwrite insurance products, then distribute customized and owned products through its own channel. “The firm partners with insurance providers (e.g. FWD, Allianz, Chubb, Tap Insurance) to create and customize microinsurance products that are affordable, and distribute them through their ecosystems partners such as Gojek, Traveloka, Lazada, Shopee and Bukalapak,” he said. He said the platform facilitates claims processes too, allowing end-consumers to easily file claims. Some examples of core products development to date include logistics protection for sending documents/packages through the Gojek app, home content protection for furniture bought from IKEA and flight delay protection for flights bought on Traveloka. “For a user who encounters a flight delay, we can access real-time information and verify and process claims through its connections to airline watchtowers and flight trackers,” he said. The platform has also serviced companies from other markets such as Shopee Thailand with which it has an embedded insurance partnership. “Our electronic protection is an embedded/a contextual insurance that customers can select upon check-out when they purchase electronic appliances on the Shopee Thailand app. This product provides 12 months of coverage for new home appliances from accidental damage and loss from theft with forcible entry,” said Mr. Randing. The firm also collaborates with Xiaomi by providing extra protection for Xiaomi mobile phones from unexpected damage or loss due to theft to cover the risk of financial loss due to incurred extra costs as a result of mobile phones being damaged or lost.

Chubb Insurance has set up a new global climate business unit, drawing on the company's extensive technical capabilities in underwriting and risk engineering. A press release published by Chubb said this initiative would bring together Chubb units engaged in traditional, alternative and renewable energy, climate tech, agribusiness and risk engineering services. The new business unit will provide a full spectrum of insurance products and services to businesses engaged in developing or employing new technologies and processes that help reduce the dependence on carbon. It will also provide risk management and resiliency services to help those managing the impact of climate change. Together these businesses already generated more than $675m in premium revenue for Chubb in 2022. Chubb chairman and CEO Evan G Greenberg said this is a part of our “expanded commitment to support the transition toward net zero in response to rising climate challenges." Mr. Greenberg said, "In the coming months, expect to see additional capabilities from Chubb to support our customers across all industries as they seek to become more carbon neutral and resilient from the threat of a changing climate." Source: asiainsurancereview.com

The average cost of data breaches is expected to surpass $5m per incident in 2023 according to a new study by cyber security and data protection company Acronis. Acronis End-of-Year Cyberthreats Report reveals that phishing and malicious email threats have risen by 60% and the use of newer phishing methods such as multi-factor authentication fatigue attacks is also on the rise. Social engineering attacks have also increased accounting for 3% of all attacks. The report provides an analysis of the cyber threat landscape including ransomware threats, phishing, malicious websites, software vulnerabilities and a security forecast for 2023. Acronis vice president of cyber protection research Candid Wüest said malicious actors continue to use the same proven playbook for big pay-outs. "Organizations must prioritize all-encompassing solutions when looking to mitigate phishing and other hacking attempts in the new year." Mr. Wüest said businesses need to re-evaluate their security strategies as the technologies used by threat actors keep evolving. The report found that ransomware retained the top spot as the biggest threat to businesses including government, healthcare, and education. Phishing and malicious emails also remain successful. Between July 2022 and October 2022, phishing emails accounted for 76% of all email attacks, up from 58% in the first half of 2022. The most email-borne-attacked industries are construction, retail, real estate, professional services (computers and IT) and finance. The report also highlights the fact that zero-day vulnerabilities and old unpatched vulnerabilities still carry the highest system compromise risk. Source: asiainsurancereview.com