By Michael F. Rellosa THE UN Intergovernmental Panel on Climate Change (IPCC) released the first installment of the IPCC Sixth Assessment Report (AR6) on August 9, the complete version of which is supposed to be released in 2022. This report is of the utmost importance and should be made known to all, as in effect, it is a warning to mankind. This first installment is officially known as the IPCC Working Group 1 report or "Climate Change 2021: The Physical Science Basis." According to IPCC Chairman Hoesung Lee, the report reflects "extraordinary efforts under exceptional circumstances"; he states further that "the innovations in this report and the advances in the climate science it reflects provide an invaluable input into climate negotiations and decision-making." A long read but the main takeaways are: 1. Faster global warming. The chances of crossing the global warming level of 1.5 degrees Celsius in the next decade or so is more imminent and so are the effects. The global plan to limit warming to 1.5 degrees Celsius or even 2 degrees Celsius will be beyond reach at the rate humankind is going. 2. Every region is facing increasing changes, some more drastic than others. For example, warming over land is larger than the global average, and it is twice as much in the Arctic. Climate change is affecting countries in multifarious ways. For example, archipelagic countries, such as the Philippines and Maldives, stand to lose major portions of their land due to sea level rise. Countries as disparate as China, Italy and Germany are experiencing record rainfall and disastrous floods not seen in thousands of years. The changes are expected to multiply with little or no warning. 3. It is not just about temperature. Climate change includes wetness and dryness, wind patterns, snow, ice, erosion of coastal areas and even changes in oceanic patterns. Examples include more intense rainfall and resultant flooding or the opposite - drought in places that did not have them before, changes in the monsoon patterns, continued sea level rise where extreme sea level events previously occurring once every 100 years could occur yearly. Loss of glaciers and ice cover, permafrost thawing, marine heat waves, oceanic acidification, the destruction of marine ecosystems and the attendant losses to sea life and fisheries are also examples. The Sixth Assessment Report will provide a more detailed regional assessment of climate change and will focus on useful information that will influence risk assessment, mitigation, adaptation and how to remain resilient in the face of all these. Insurance is one of the industries that can help mitigate the impact of these changes and assist in a post-catastrophe scenario where the insured populace can rebuild and reestablish their lives and livelihoods greatly increasing their resilience to disasters. The Philippine insurance industry, with the help of its regulators, the Insurance Commission, and direct or indirect assistance from the World Bank, the GIZ and other organizations are rushing to cobble together a program called the Philippine Catastrophe Insurance Facility (PCIF) with four core objectives: 1. A stronger nonlife insurance industry: The PCIF will enable more insurers to provide coverage against disasters and, thus, promote the financial resilience of the populace and the country's businesses against disasters like floods, typhoons and earthquakes. This includes ensuring that insurers provide timely claims settlement after each natural disaster. 2. Higher insurance penetration over a period: The enhanced ability to develop and offer catastrophe insurance solutions is aimed to be converted into a marked increase in insurance penetration. This requires complementing the advanced supply with complementary measures, primary of which is an education campaign to increase awareness. 3. Adequate and sustainable catastrophe premium rates: As the local insurance industry has limited financial capacity to adequately retain Cat Risks, the PCIF is envisioned to increase Nat Cat premiums of an estimated 30 percent to 50 percent of current market rates via the use of technical proven rates. To ensure the affordability of the Insuring public, this is to be done in increments that would be acceptable to all. The purpose is to ensure a more resilient industry where the premium reserves are sufficient to respond to disasters. 4. Increased local catastrophe retention: When currently, the providers of Cat insurance reinsure primarily abroad, the PCIF will provide the opportunity to leverage on the retention of the Philippine companies in a way that the premium base can be grown internally. Nevertheless, given the nature of Cat Risks, some level of international reinsurance is likely to remain necessary. Still, in the initial stages of its formation, this initiative needs to be coddled and coaxed into being finalized as a minority of players still need to be convinced to throw their considerable weight and support behind what all seem to agree is an initiative with a noble and timely purpose. Source: manilatimes.net

By Michael F. Rellosa THE World Economic Forum (WEF) has been busy evangelizing on the "resilience initiative" following two "once-in-a-generation" shocks that the world experienced since the advent of the 21st century: the 2008 global financial crisis and the yet-to-be-resolved, Covid-19 pandemic. These two events, unprecedented in history, have wide-ranging and serious effects on the sociopolitical and economic fabric of many if not all countries. The pandemic alone is causing nearly half the global workforce to lose their means of livelihood with countries such as the Philippines most impacted due to the large swaths of the population close to or already below the poverty line. On top of that, the WEF showed that the "public debt-to-GDP (gross domestic product) ratio is expected to hit 140 percent in developed economies." It is also forecasted that this pandemic will reduce global real gross domestic product growth by 4.5 percent in 2020, translating into a monetary loss of global GDP of around $77 billion. The need to build greater resiliency is indeed imperative and the world needs the insurance and asset management industries to deliver against this imperative. This is the expected gist of the talk of Mr. Andre Belelieu, head of insurance and asset management at the WEF, during his highly anticipated talk at the Fourth Asean Insurance Summit to be virtually held on Oct. 26, 2021 and organized by the Singapore College of Insurance and the Asean Insurance Council. Regional industry stalwarts from both the life and general sectors such as Messrs. Benedict Sison of the Philippines, Antony Lee of Malaysia, Budi Tampubulon of Indonesia and Christian Sandric of Singapore will comprise the panel to add the regional content and response to this initiative. The summit is expected to be graced by the presence of the region's insurance regulators as it coincides with the annual Asean Insurance Regulators Meeting and the Asean Insurance Councils Conference hosted by Singapore this year, proof that the industry is taking this seriously and is prepared to throw its weight behind such an initiative. In response to the WEF's challenge to resiliency, the industry must be ready to respond to such challenges. Moses Ojeisekhoba, Swiss Re's chief executive officer for Reinsurance, wrote on his blog that "the insurance industry already had existing models to predict the outcomes of such global events such as the pandemic and other "Black Swans." The question is why did the industry, along with business and governments, fail to prepare better for this pandemic and for other such occurrences?" He goes on to say that "despite the evidence, it was far easier to perceive such a situation as an unlikely event because to deem it likely would be a "call to action." Therein lies the rub. Are we prepared to act, if so, how? Or are we doomed to a quixotic existence battling windmills? It was suggested that perhaps the industry can introduce products that address such high risk but low probability events. The problem is that this is not the bread and butter of the Philippine insurance industry and for it to take the initiative will cost money, time and lost opportunity to concentrate on what brings in the sales that is badly needed at this point in the evolution of the industry in the Philippines. This is not to say that we are not trying. This column has already reported on the creation of the Philippine Catastrophe Facility (PCIF), an example of addressing the results of a catastrophic typhoon or earthquake. This is still a work in progress, its third iteration in the last decade and despite the best intentions of all and hard work of many, it is still far from being fleshed out and completed. This brings us back to the same problems Mr. Ojeisekhoba noted in his blog. He says, "Behavioral economics tells us that humans tend to focus on the short-term outlook, quickly forgetting the lessons of the past and underestimating vulnerabilities when faced with future disasters. Added to that is the inertia that prevents people from changing the status quo, especially when the various protective measures on offer are uncertain by their very nature and consume resources." As a solution, he suggests that "we need to do much more than tweak existing products. Rather, we need to integrate these behavioral traits into our products, right from inception and design, so that the final product will fully reflect customers' less forward-looking instincts while addressing what we assess are individuals' actual needs based on our historical models and projections." We need to achieve the equilibrium between "cost analysis that makes a product feasible and the human dimension that shapes everything else." If Mr. Ojeisekhoba is right, then the Philippine insurance industry is on the right track. To him, the way forward is for the industry to work with the government to address the lack of awareness, access and affordability by pooling both knowledge and risk - exactly what the PCIF aims to achieve. Finally, he says, and we recognize, that the best way forward is through collaboration, not confrontation. Source: manilatimes.net

By Michael F. Rellosa IF 11,000 scientists from 153 countries get together, agree and sign a paper (Ripple and colleagues, 2020), complete with the planet's vital signs indicating extremely worrying trends and, at the same time, exhibiting the lack of humanity's progress to halt and reverse climate change, then we better sit up, take notice and heed this clarion call for action. Since then, nearly 3,000 more scientists have added their signatures, and 1,990 jurisdictions in 34 countries have formally declared a climate emergency. If you are not living under a rock, you would have heard of the unprecedented snowballing of climate-related extreme events such as the devastating flooding in South America and Southeast Asia, record-breaking heat waves and the resultant wildfires in Australia and the Western United States, an extremely busy Atlantic hurricane season and apocalyptic cyclones in Africa, South Asia and the Western Pacific. No wonder Ted Torres, erstwhile business editor of a rival paper, has been posting nonstop about climate change on his Facebook page. No wonder friends from the multilateral agencies have, likewise, been pushing solutions that are supposed to prepare us for such scenarios and to make our existence a bit more sustainable. Yet, nary a sign of concern or even acknowledgment that the future is bleak and that we need a multilateral, all of government, nay, all of nation — perhaps even an all of planet — approach to the problem at hand. It is unfortunate that other events, the ongoing pandemic, the geopolitical strains and general disintegration of society, the peddling of outright disinformation and the resultant cynicism of the populace have taken up much of our attention. Be that as it may, the insurance industry in the Philippines — the country, which ranks as one of the most vulnerable to the effects of climate change and the resultant catastrophic perils — which is supposed to be experts at risk management and purveyor of appropriate solutions, has not even started to acknowledge the situation and barely scratched the surface in coming up with solutions. It is true that the government, together with business and the rest of the populace, finds itself in the same situation. However, it is my belief that the insurance industry should be among the first to respond. In previous columns, I mentioned the various initiatives that the industry, the Insurance Commission and its partners and collaborators have come up with, such as the Philippine Catastrophe Insurance Facility, or PCIF, a scheme designed to pool the catastrophic perils taken on by the industry even out its peaks and valleys thereby lessening volatility, and increasing efficiencies while leveraging on size when dealing with the international reinsurance market, hopefully resulting in better and sustainable pricing. The other promising one is the introduction of a parametric product, the triggers of which would be excess rainfall and wind (read typhoon). The first iteration of this product is a scaled-down version, which could be sold on a stand-alone basis or bundled into the existing products of insurance companies. Owing to its size, it is currently designed for the underserved portion of the insuring public, but it is easily scalable to meet the needs of the mainstream. There are other initiatives such as the introduction of nature-based solutions, and a revved-up plan on education and awareness in conjunction with other concerned groups such as Arise Philippines (watch this space for more information). It may be a start, but truth be told, we could do more. We could start by being acutely aware of the current situation, follow the science and gain an acceptance of what will be and what can be done to better prepare ourselves. Start early, start now, so that what solutions we have, to begin with, gain traction and are given a chance to stabilize and be able to work properly once the inevitable does occur. It is true that in a democracy, one cannot push one's ideas and expect everyone to follow. No one has a monopoly on good and workable ideas and solutions, but please realize that indeed there is no perfect solution. We could spend ample amounts of time to produce one that will be acceptable to all. Therein lies the rub, we do not have the luxury of time. Source: manilatimes.net

By Michael F. Rellosa THE forthcoming national elections in 2022 promise to be the most important one in a generation and will dictate the future of this country. As a risk manager and insurance practitioner, I cannot help but apply the risk management process and relate key principles of insurance to the elections and draw out pertinent lessons that I would want to share with you. The risk management process (RMP), as taught to insurance newbies, is a simplified one but encapsulates its most important aspects. Allow me to dive right in and illustrate the benefits of utilizing the process to manage the myriad risks that these elections present to us both in the electoral process itself but more importantly, in the results of such elections. Faced with the pervasiveness of risk, we must produce a well-thought-out plan to manage such risks. And in the insurance world, this includes four simple steps that if used singly or together are supposed to manage and control such risks, rendering it acceptable as compared to the outcome if not managed. The four risk handling methods are risk avoidance; loss prevention or reduction; risk retention; and finally, risk transfer. However, before using these methods, we must first apply the three steps of risk management, which are: risk identification; evaluation and the measurement of the risk; and finally, the selection of the risk handling method (RHM) itself. We must be able to identify this risk, risk being the possibility of something going wrong. Is it a moral risk, is it a physical risk, is it a liability risk? Knowing what the risk is will dictate what risk handling method or combination of RHMs are best to use. Having identified the risk, we then would have to assess the chances of such a risk occurring as well as the extent of damage or loss should this risk occur. Finally, knowing what the risk is, the chances of it occurring and how big and how far the negative results can go, we can then make an informed decision on what risk handling method or combination of such methods to use. Let us take on the task of choosing the best candidates. Following the procedure laid above for each of the elected positions at stake, we first identify the risks and the extent of the damage that each candidate can cause if elected (risk identification). Then we measure the chances of these risks occurring if that candidate is chosen as well as the chances of that candidate winning (risk measurement and evaluation). Given the answers, we can then choose what the most appropriate risk handling method or combination of methods to use. We can avoid the risk, that is, we do not vote for the candidate we deem to be the riskiest in terms of foreign relations, rule of law, experience, education, track record and history, even religious beliefs, or whatever criteria one chooses to utilize. We can try to prevent or reduce the risks from playing out. This may be difficult on an individual basis, but you can always join like-minded groups with similar advocacies and actively participate in their activities. We can choose to retain the risk if the risky attributes are small and are of no consequence in the bigger picture. Or we can choose to transfer the risk to another party (that is, through insurance). This is where it becomes tricky and self-limiting as not all political risks are readily transferable or insurable. When it comes to political risks, only certain acts of government or leaders of government can be insured against, or more precisely, the effects of their acts can be insured against. Examples include expropriation, force majeure, regulatory changes, legal risks, etc. The insurance policies designed to address these include, but are not limited to, industrial all risks coverages, expropriation covers, political violence covers, arbitral awards covers, denial of justice covers, among others. These are highly specialized covers and need careful assessment and negotiations with the insurer. In other words, one cannot rely on insurance to cover these risks unless one is a conglomerate, filthy rich and able to afford such a product. This practically leaves us with only three risk handling methods to use when using the RMP in choosing a candidate. We avoid the rotten ones, we try to reduce the negative effects by putting safeguards in everything — from poll watchers to cyber experts — to guard against cyber manipulation or have an army of truth warriors to counter misinformation and fake news, among others. Finally, we retain the good candidates based on our assessment and campaign for and vote for whom we may ascertain to be the best! Source: manilatimes.net

By Michael F. Rellosa HAVING grown up in the provinces, one grows accustomed to the flow and ebb of the seasons and with it, the weather. It used to be that the rains precisely started in June, gathered strength through the months and petered out by late October. November to late April were the dry months when it begins cool and ends up blistering with relief ushered in by the arrival of the monsoon; pretty cyclical and rarely deviating. Not so anymore. Rains or rather super typhoons can now occur in any month of the year and barrel through any province with the bullseye anywhere along the eastern seaboard from the Babuyans all the way to the Celebes Sea. It used to be a narrower alley with the Bicol Region as the favorite entry point. Climate change? Likely, but we and that means almost everyone from government bureaucrats down to the man on the street seems to be in a state of denial. In my mind, what we need is an all-of-nation approach to solving the problem. What the government can do, I will leave for a future article, but what the average person can do, I can hopefully offer some suggestions. Obviously, for catastrophic risks which typhoons, floods, and the like fall under, the best option would be to obtain an insurance cover for it. If one suffers loss or damage due to strong winds, heavy rainfall, floods spawned by a typhoon then they can expect the insurer to pay for the damages allowing the insured to build back. There are several kinds of policies that one can get to protect oneself. The most common being the AOG, or acts of God, or extending a fire coverage to cover it. With the addition of a measly 0.15 percent (the current rate for catastrophic perils, i.e., earthquake, typhoon and flood), one can be protected. So, if your house is worth say P3 million, the additional premium you would have to cough up to avail of this protection would be in the vicinity of P 4,500 only. Would you rather not get this extension to your normal fire policy than pay another P3 million to get your house back should it be totally blown away by a typhoon or swept away in a flood? Paying the P4,500 in extra premiums to rest easy knowing you will be indemnified or paid should the peril occur is, in anyone's reckoning, the better bet. With this type of coverage, however, it may take some time before you get the money to rebuild, the reason being that it goes through a process of indemnification, meaning you get paid what you actually lost, no more no less. That means, an expert is supposed to investigate the claim, come up with the cause of the loss and then quantify the actual quantum of the loss. This process may take several months. There is, however, another way of protecting oneself and bypassing the indemnification process, which results in a faster payout, i.e., in a matter of days. This is where you get yourself a parametric cover. Parametric covers are simple, in the sense that it agrees to pay you a prescribed sum if and when the trigger or event that you want to be protected against happens. These triggers could be wind speed (typhoon strength) or amount of rainfall. If the pre-agreed authority, i.e., the national weather bureau (Pag-asa) declares the occurrence of these triggers, then the policy automatically pays out whether you actually sustained a loss. These parametric covers can be affordable as it is not designed to reimburse (or indemnify) you for your losses, it merely pays out a pre-agreed sum to help you tide over a loss. So, if your property is with P3 million but you opt to get only a P500,000 policy, it will pay you only the P500,000. Due to its design, it becomes affordable. This is a concept long cherished by Filipinos where one can purchase in smaller units, locally known as the "tingi system." Both these types of products are already available in the market. Contact your trusted agent, broker, or the insurance company of your choice. They will be more than happy to assist. Do not wait for another "Odette," it is best to look into it now. Source: manilatimes.net

All systems go for our PIRA Online Campus Tour today, 12 December 2022, at the Polytechnic University of the Philippines (PUP). This event will be done via Zoom. Please find the Zoom link below: https://us02web.zoom.us/j/85885400987?pwd=dHF1SnRpRjJoRmhTMmRwc25XcDE0QT09

Inflation is expected to become a significant issue at 1 January renewals, being an ongoing challenge to carriers' profitability, according to a forecast posted on the website of global law firm Clyde & Co. At the Baden-Baden meeting in October 2022, inflation was at the front of European reinsurers’ minds, says Ms. Eva-Maria Barbosa, a partner based in Clyde & Co's Munich office, in a blog that is part of insights published in the law firm’s “Insurance 2023—the Year Ahead” series of articles. The impact of inflation on the cost of doing business means insured losses will be more costly across all lines of business, leading to an inevitable increase in deductibles on renewing coverage, Ms. Barbosa says. From the reinsurers’ perspective, these will mean a reduction in the amount of more profitable first-layer business that they can write, skewing the balance of portfolios towards more volatile, large-loss coverage. Climate change At the same time, the influence of climate change on natural catastrophe losses is causing reinsurers to re-think their approach to European exposures. Whereas insurers have historically viewed European nat cat as a valuable hedge against US hurricane risks, recent events such as the flooding in Germany’s Ahr valley and the hailstorms in France are making the balance between US and European business unsteady. With practically no alternative capital available for these risks currently, there is likely to be a sharp reduction in available nat cat reinsurance capacity at upcoming renewals, and this development is likely to extend well into next year, says Ms. Barbosa. Source: asiainsurancereview.com

The health and state of the global economy will have the greatest impact on the spread of cyber crime in 2023 according to cyber safety and security company Norton. The company released its top cyber trends for 2023 in December 2022. The report expects that the pressures associated with economic uncertainty and rising costs will create the perfect environment for scammers to take advantage of people when they are more vulnerable. The trends report says that it is expected that cyber criminals will trick victims into surrendering personal information, emptying their bank accounts, or spending money for products, services or ‘lottery winnings’ that never arrive. Norton research and technical director Kevin Roundy said, "We anticipate scammers will continue to prey on the vulnerability of people as economic pressures rise in 2023. Cyber criminals love to exploit seasonal opportunities, and consumers are facing a perfect storm of rising prices in the middle of the busiest shopping season of the year when scammers are particularly active. Mr. Roundy said scams are always harder to detect during the holiday season because consumers expect deep discounts and may believe prices that would normally seem too good to be true. Predictions for 2023 Scammers will prey on vulnerable consumers: Financial-based scams such as assistance scams faking government assistance programmes to steal personal identifiable information; shopping deal scams setting up fake e-shops promoting low-cost products to steal personal information or cash out without delivering the order; and romance scams asking emotionally vulnerable consumers for money or gift cards are expected to rise in 2023. Short-staffed companies will be more open to vulnerabilities: Operating with smaller staff, short-staffed companies will experience a jump in data breaches and ransomware attacks. Advances in AI will make scamming easier: Scammers are likely to continue to wield AI in their crimes as this technology becomes even more accessible and easier to use. Scammers can also imitate real people in real time with deepfakes to trick people into giving over their financial and personal information. Anticipate more breaches: Cyber criminals are finding ways to breach standard multi-factor authentication technologies. Companies that continue to use weak two-factor authentication (2FA) practices will leave themselves and their customers open to serious data breaches, which can lead to mass leaks of consumer information. The report expects to see more data breaches, making it even more critical to continue to use unique, complex passwords across accounts. The evolving threats Be skeptical: Cyber criminals often pose as popular companies, organizations or people in our network. Never directly click on buttons or links without digger deeper and verifying who is actually sending them to you. Manage your passwords: Make sure your password is unique and avoid using the same one across different accounts. Add another layer of security by using a password manager to safely store and help create secure and complex passwords. Use ‘unphishable’ factors for MFA: Unphishable factors, such as biometrics, device-level security checks, hardware security keys, and cryptographic security keys are nearly impossible for cyber criminals to intercept, making MFA and 2FA practices more secure.

ARISE Japan and ARISE Philippines hosted their third Knowledge Sharing Session (KSS) on 22 July 2022. In his opening remarks, Mr. Masato Takamatsu, President of Tourism Resilience Japan and ARISE Japan Lead noted the KSS series will cover the third of the four ARISE Priority Areas, Insurance as Risk Managers, following previous sessions on SMEs and Resilient Infrastructure. He welcomed the more than 30 participants into this opportunity for close and direct conversation with ARISE colleagues across Networks. In a short scene-setting discussion, Ms. Yuki Matsuoka, Head, UNDRR Office in Japan, reviewed the outcomes of the Global Platform 2022, held in Bali, Indonesia this past May, which included specific mentions of insurance its role as a sector to incentivize risk reduction and prevention, as well as the key themes and events in the upcoming Asia-Pacific Regional Platform (APMCDRR) in September in Brisbane, Australia. She introduced two additional participants from UNDRR, Ms. Sara Wade-Apicella and Mr. Erick Gonzalez from the Partnership Unit in Geneva. Mr. Michael Rellosa, Philippine Insurers and Reinsurers Association (PIRA) gave the first icebreaker presentation titled “Insurance industry’s response to address DRR issues,” a very informative talk beginning with a broad overview of initiatives undertaken by the insurance industry in the Philippines, and a deeper dive into the Philippines Catastrophic Insurance Facility (PCIF) and a parametric insurance product for MSMEs. “The Philippines sits at the apex of climate and seismic risks, and has for a long tried to address these risks, primarily through micro-insurance products. However there was a realization that this was not the only way to address this gap” said Mr. Rellosa, explaining how PCIF, a systemic, multi-sectoral collaboration between local and global insurance players, regulators, World Bank and GIZ came into existence, which increases the resilience of the local insurance sector. He described how PCIF, expected to be operational later this year, will address the traditional insurance market and traditionally underserved residential and SME businesses through two separate streams, the latter available in small, flexible increments. “The two PCIFs are likened to the outrigger canoe ubiquitous to the Philippines, supporting the canoe, or the country, itself, with a goal to be sustainable and to be able to bounce back after disasters” said Mr. Rellosa. Mr. Rellosa described the usefulness of parametric products, for the insured who can access immediate cash payouts after a disaster event, as well as for the insurers as they allow for digital and automated payout processes and can be bundled with traditional insurance products, and may be used to insure residences, shops, and even crops. He shared lessons learned, such as having to price-adjust after an initial launch of the parametric product failed to attract enough clients. Ms. Hiroko Urashima, MS&AD Insurance Group Holdings, Inc. then followed with a presentation on the role of insurance as risk managers. “We have three social missions as an insurance company: prompt and appropriate payment; proper understanding and adequate preparedness, which includes insurance penetration; and contributing to the rapid recovery and subsequent reconstruction through close cooperation with the local community” said Ms. Urashima. Ms. Urashima illustrated how such corporate missions translate into action through several examples. First she shared examples of brochures that educate citizens on the importance of insurance and was instrumental in narrowing the protection gap. She shared an online tool for real-time damage prediction, cmap.dev, initially developed to support quick payouts among the insurance industry itself. “Damage prediction is important for insurance companies as we need it for our heavy load of payout procedures, but this information is also important to local governments to prevent secondary disasters, and to give appropriate support to residents” explained Ms. Urashima, as the reason the tool was subsequently made available to the public. She also shared a smartphone app that guides residents to the nearest shelter in flood conditions by combining maps and street-view photos; the LaRC-Flood project, a collaboration with academic institutions that visualize IPCC-related research outputs as an interactive global forecast map of increased flood frequency based on climate change impacts, also available for free; and a new, on-going, government-funded research project to produce high-precision global flood hazard maps for present climate as well as maps reflecting climate change. “We try to think about the future of disasters. Extreme weather is just weather, but turns into disasters depending on how we live and how we build our cities, so it is important to know what risks exist in the future and build resilient cities. The role of insurance is no longer just about giving compensation and coverage, but to support recovery and prevent future accidents and disasters. In this sense, investigating the effects of climate change is urgent and it is our role to contribute new science and knowledge to society” said Ms. Urashima. In the short discussion portion that followed, Mr. Erick Gonzalez, UNDRR, asked what the enabling factors are for insurance projects to be successful. Mr. Rellosa noted that one success factor was to have everyone on the same page, through inclusion in early development stages. Ms. Urashima agreed with need to engage multiple stakeholders, as well as its difficulty, noting that patient follow-up and explanation is often necessary. As an example of collaboration Mr. Rellosa also noted the Hazard Hunter app, a product developed by GeoRisk Philippines, a multi-agency initiative led by the Department of Science and Technology - Philippine Institute of Volcanology and Seismology (DOST-PHIVOLCS) and utilized by PIRA. Ms. Urashima asked about the data behind the Philippines’ parametric products, which needs to be of consistent quality and coverage. Mr. Rellosa noted that in the existing product, the data actually comes from the Japanese Metrological Agency, illustrating that the data does not necessarily have to be locally sourced. Ms. Liza Silerio, ARISE Board noted in her address that “ten years ago in the Philippines, financing of disasters relied on a reactive approach, which we know is unsustainable. Efforts have been undertaken to promote a more proactive approach, and I’m glad to hear about progress in both countries”. “We continue to work to change the mindset, reaching out to businesses, talking to governments, and we can do it with the private sector pushing it in the forefront” she noted. VAdm Alexander Pama, Co-Chair, ARISE Philippines appreciated the KSS as a cannot-miss informative event, and welcomed the high turnout of more than 35 participants from the two networks, saying “We would want to expand the sharing of this knowledge, maybe even beyond the membership of ARISE. The information shared this afternoon gave a good introduction of what ARISE Philippines and ARISE Japan are doing, and this KSS is one of the best practices we are doing right now. We will also look into working on common projects that other ARISE networks can emulate." Source: ariseglobalnetwork.org

Higher ESG ratings lead to better underwriting performance in insurance industry according to a new joint study published by insurance broker Howden and specialty insurance and (re)insurance business Fidelis. A joint media release by the two organizations said the study includes loss ratios across 30,000 policies from Howden and Fidelis’ datasets comprising a premium value of around $9bn, against third party ESG ratings. It is perhaps the largest study that has been conducted to date to establish the link between these factors. The analysis reveals that environmental ratings have the strongest correlation with loss ratios. However, there is variation by line of business and industry. Of the multiple lines of business studied, property insurance shows the strongest correlation between better ESG scores and better loss experience. The study reflects Howden and Fidelis’ mutual desire to support the transition to a more sustainable future. Howden and Fidelis are working to further examine the findings with a particular focus on exploring underlying causation, in order to enhance understanding and usability. Howden Group CEO David Howden said, “It is great to see the proactive approach that Fidelis and other insurers are taking to better understand the link between ESG profiles and risk. The data backs up our long-held belief that clients should be rewarded for high ESG credentials. “This is an obvious way in which the insurance industry can support the transition. I hope to see, in the near future, ESG factors built in to underwriting processes and pricing decisions to a much greater degree.” Source: asiainsurancereview.com