Local insurers are no longer optimistic about a possible extension of the final tranche of increases in capital requirements beyond the current deadline of 31 December 2022. “We are starting to see that it may not be possible. Everyone is just preparing for it,” Mr. Michael Rellosa, executive director of the Philippine Insurers and Reinsurers Association (PIRA), said. But the industry maintains that it would continue to push for a review of the capital requirements that it views as more than adequate, according to a Philippine Star report. PIRA says the industry is being pragmatic on the impending hike in capital requirements, according to a report in the newspaper The Philippine Star. “We are not giving up our position. But at the same time, we are trying to be pragmatic and if the extension does not push through, then we just have to meet the requirements,” Mr. Rellosa said. Under the Insurance Code, existing insurers must have a net worth of at least PHP1.3bn ($23m) by end-December 2022 from the current PHP900m. Since the start of the year, PIRA and the Philippine Life Insurance Association (PLIA) have been urging the Insurance Commission (IC) to reconsider forgoing the increase, arguing that doing so would limit competition in the industry. But the Department of Finance, the IC’s mother agency, has been firm in its position not to defer the hike. PIRA argued that the local insurance industry is not as big as those in Southeast Asian neighbours such as Singapore or Indonesia, and yet the capital requirement would soon be the highest in the region. Among PIRA’s members, Mr. Rellosa says about 90% are already compliant with the PHP1.3bn capitalization requirement. A new insurance code was signed into law in the Philippines in 2013 under which capital requirements for insurers were increased every three years until 2022. The required net worth was PHP250m in 2013, PHP550m in 2016, PHP900 in 2019, and PHP 1.3bn in 2022. Source: asiainsurancereview.com

QBE Asia has launched Premiums4Good, a global initiative that invests everyday premiums to make a difference to communities across the globe. Through Premiums4Good, a portion of customers' premiums are put into investments that create social and environmental impact alongside a financial return, at no extra cost to the customer. The investments include projects that help the environment, like renewable energy, waste management and water conservation, and ones that deliver direct, sustainable benefits to communities such as helping the homeless or providing additional social care to adults and young people. Asian Development Bank (ADB)'s gender thematic bond, which brings gender equality support and women's empowerment to the fore is one such programme supported through this initiative. This has enabled communities to improve social protection and health programmes, reduce poverty and better support the prevention of and response to gender-based violence. This has also seen more tangible strategies to further women's entrepreneurship opportunities and to help them secure green and more financially stable jobs. As of July 2021, ADB has raised over $2.9bn through this programme. Another investment undertaken through Premiums4Good is OCBC Bank's green bond, which supports green investment portfolios and projects in the renewable energy and green buildings categories in the Asia-Pacific region. Projects through these bonds have to date collectively surpassed OCBC's S$10bn ($7bn) sustainable finance portfolio set in 2020, with a goal to reach a S$25bn sustainable finance portfolio by 2025. Premiums4Good is offered across QBE's operations in Australia, Pacific, Asia, Europe and North America, with an investment portfolio spanning multiple asset classes, geographies and impact areas. As of 31 December 2021, QBE has invested $1.4bn through Premiums4Good, with a goal to reach US$2bn by 2025. To acknowledge the contributions its customers and partners can make, it issues a certificate of recognition for their Premiums4Good contributions. The initiative is aligned with the United Nations' Sustainable Development Goals to support advancement of these global goals. Source: asiainsurancereview.com

Fire, collision and sinking, and damaged cargo are the top causes of marine insurance losses by value according to Allianz Global Corporate & Specialty's (AGCS) analysis of more than 240,000 claims worth EUR9.2bn in value. The analysis reveals that inflation is compounding existing trends driving higher claims severity. Soaring prices for steel and spare parts and rising labour costs are impacting hull repair and machinery breakdown claims. Supply chain issues continue to impact claims, as does climate change through extreme weather events and new exposures linked to the net-zero transition. According to AGCS fire and explosion incidents cause the most expensive insurance claims in the marine industry, while at a time of rising exposures and inflation, cargo damage is the most frequent cause of loss. The analysis is based on more than 240,000 marine insurance industry claims worldwide between January 2017 and December 2021, worth approximately EUR9.2bn in value, and has identified a number of claims and risk trends that are driving major loss activity in the sector. AGCS global head of marine claims Regis Broudin said, “The number of fires on board large vessels has increased significantly in recent years, with a string of incidents involving cargo, which can easily lead to the total loss of a vessel or environmental damage.” “At the same time, the shipping sector is also having to deal with many other challenges including a growing number of disruptive scenarios, supply chain issues, inflation, time-pressured crew members and employees, increasing losses and damages from extreme weather events, implementing new low-carbon technology and fuels, as well as Russia’s invasion of Ukraine.” The value of both vessels and cargo has been increasing at a time of growing exposures associated with bigger ships, the largest of which can carry 20,000 containers at one time. The combined value of the global merchant fleet increased 26% to $1.2tn in 2021 while the average value of container shipments has also been rising with more high-value goods such as electronics and pharmaceuticals. It is not unusual to see one container valued at $50m or more for high-value pharmaceuticals. Damaged goods, including cargo, is the top cause of marine insurance claims by frequency, and the third largest by value the analysis found. The most common claims are physical damage, typically from poor handling, storage and packing. However, recent years have also seen a number of high-value theft and temperature variation claims – the latter can particularly impact pharmaceuticals. Theft is the third most frequent cause of claims with criminals targeting consumer electronics and high-value commodities such as copper. Cargo is typically stolen from ports, warehouses or during transits. The recent boom in container shipping has also affected cargo claims with a global shortage having resulted in substandard and damaged containers being brought back into use resulting in losses. AGCS global head of marine risk consulting Captain Rahul Khanna said, “The risk of theft and damage to high-value cargos needs to be addressed with additional risk mitigation measures, such as GPS trackers and sensors that provide real-time monitoring on position, temperature, moisture shock, and light and door openings.” Source: asiainsurancereview.com

Climate change impacts - from slow-moving crises such as drought and sea level rise to weather disasters - are increasingly displacing people from their homes and worsening conflict threats according to scientists at the COP27 UN Climate Talks. According to a report by Thomson Reuters Foundation scientists have said that about 1.6bn people now live in climate change ‘vulnerability hotspots’, a number that could double by 2050 if fossil fuels continue being used at the rate they are today. Potsdam Institute for Climate Impact Research director Johan Rockström said this puts a third of the world’s population at risk of weather disasters, water and food shortages, displacement and other threats that could spur social instability. Professor Rockström said limiting global temperature rise as a result of climate change to 1.5 degrees Celsius - the more ambitious target of the 2015 Paris Agreement - “is not a goal, it is a physical limit”. He said, “Go beyond it and we are likely to trigger tipping points.” These could include irreversible melting of Greenland ice that could set in motion seven metres of sea level rise over time, enough to swamp major coastal cities. With fossil fuel emissions still rising, despite a need for them to fall by 45% within eight years to keep the 1.5 degrees Celsius goal alive, scientists are thinking about how to better grab attention to enact change. The ability of people to adapt to coming climate impacts is limited - which means faster emissions cutting is crucial - and worrying new climate-related health threats are on the rise, including from heat extremes. In addition, climate change impacts - from slow-moving crises such as drought and sea level rise to weather disasters - are increasingly displacing people from their homes and worsening conflict threats, the scientists said. Reducing forest losses and other land degradation is also important, scientists say, as nature and soils currently soak up a quarter of the world’s emissions, effectively keeping planet-heating carbon dioxide out of the atmosphere. Ensuring local people have a major say in what climate-resilient development should look like in their communities is also crucial to ensuring that limited money is effectively spent, the scientists said. Source: asiainsurancereview.com

Reinsurance rates for property catastrophe business should increase by well over 10% when contracts are renewed in January 2023, Fitch Ratings says. Fitch expects double-digit percentage premium rate rises for property catastrophe cover in 2023 driven by insured losses of about $120bn in 2022 and the increasing frequency and severity of natural catastrophe claims. Increasing prices and higher reinvestment yields will help to offset the effects of rising claims due to high inflation and climate change. Fitch, therefore, forecasts broadly stable underlying profitability for the global reinsurance sector in 2023 and is maintaining its neutral fundamental sector outlook. Price rises will be most pronounced in the regions worst affected by natural catastrophe events in 2022, including Australia, Florida, and France. Hurricane Ian is likely to have caused between $35bn and $55bn of insured claims, making it one of the costliest natural catastrophe events ever. Typically, though, two-thirds of non-facultative reinsurance business is renewed in January, with a regional focus on Europe. 2023 capacity Fitch expects reinsurance capacity for property catastrophe risks to be pressured in 2023, with selective capital inflows from existing or new risk carriers more than offset by partial or total withdrawals by other reinsurance providers. Furthermore, limited retrocession capacity will put additional upward pressure on property cat premium rates. Fitch also expects tighter terms and conditions in 2023, including a movement to named perils coverage from all perils, higher insurer retentions, and reduced limits provided. Nevertheless, we believe demand for property catastrophe reinsurance during the 2023 renewal season will be broadly met, except for Florida. The global credit rating agency expects significant premium rate increases for specialty lines of business, such as marine and aviation, that have been most affected by the war in Ukraine. Motor hull premium rates will also increase in response to high spare-parts price inflation, but increases for liability lines should be more muted as more reinsurance capacity will be directed to this part of the market. Claims inflation has yet to be pushed up by social inflation or general inflation but Fitch expects this to change in 2023, with negative implications for underwriting margins and reserves. Underestimating claims inflation for liability lines is one of the most significant risks for reinsurers. Fitch has updated its global reinsurance forecasts and now expects the calendar-year combined ratio to improve by about 4ppt in 2023, assuming a more normal level of natural catastrophe losses and given the withdrawal of cover related to the war in Ukraine. However, underwriting margins excluding natural catastrophes and war-related losses are likely to only marginally improve. The steep rise in interest rates in 2022 has led to write-downs on large parts of reinsurers’ investment portfolios. This has caused accounting capital to shrink significantly due to the accounting mismatch between assets and liabilities. However, the impact on economic and regulatory capital has been neutral to positive, and Fitch does not consider the industry’s capitalisation to have suffered. The write-downs have also depressed investment income, leading to lower reported earnings for 2022, but rising reinvestment yields should gradually boost investment income over time. Source: asiainsurancereview.com

Insurers plan to push for a review of the increased capitalization requirement as lawmakers remain mum on the industry's appeal to delay its implementation. PIRA Executive Director Michael F. Rellosa clarified in an interview at the Coop Climate Summit 2022 yesterday, that the industry has not wavered in urging regulators to either maintain the present level of capitalization or at least postpone the implementation date. Insurers give up on capitalization rules extension Louise Maureen Simeon - The Philippine Star MANILA, Philippines — Local insurers are no longer optimistic on the possible extension of the final tranche of increase in capital requirement by yearend, but the industry maintained it would continue to push for its review. During the briefing for the Coop Climate Summit 2022 yesterday, the Philippine Insurers and Reinsurers Association (PIRA) said the industry is being pragmatic on the impending hike in capital requirements of firms. PIRA, however, said it is not giving up on its stand that the current requirement is more than adequate. PIRA is the umbrella organization representing the collective interests of the non-life insurance industry in the country. “It is an ongoing advocacy, but we are starting to see that it may not be possible. Everyone is just preparing for it,” PIRA executive director Michael Rellosa said. “We are not giving up our position. But at the same time, we are trying to be pragmatic and if the extension does not push through, then we just have to meet,” he said. Under the Insurance Code, existing insurers must have a net worth of at least P1.3 billion by end-December from the current P900 million. Since the start of the year, PIRA and the Philippine Life Insurance Association (PLIA) have been urging the Insurance Commission (IC) to reconsider forgoing the increase, arguing that doing so would just limit competition in the industry. But the Department of Finance, IC’s mother agency, has been firm in its position not to extend the requirement hike. Rellosa said PIRA would continue to push for the review, as well as reasoning out with the DOF through its position paper. “Even with the existing law, there could still be a review. Every time there’s a new administration, we have to explain our position to them again. But we are still maintaining it, that hopefully the P900 million will be more than adequate,” Rellosa said. “We will just be relying more on the review once it takes effect. We will try to show that we have complied, that we are trying, but it’s difficult for us,” he said. PIRA argued that the local insurance industry is not as big as those in Southeast Asian neighbors such as Singapore or Indonesia, and yet the capitalization requirement would soon be the highest in the region. Rellosa also underscored the impact of the pandemic that decreased the net worth of insurance firms. Of PIRA’s members, Rellosa said about 90 percent are already compliant with the P1.3 billion capitalization requirement. Source: philstar.com

Unprecedented digitalization in our society has pushed many business leaders and executives to understand how they can adequately assess and govern cyber risk according to a new blog by World Economic Forum (WEF). The new WEF blog says that governing cyber risk is a holistic process aiming to improve organizational cyber resilience. In this context, governments define cyber resilience obligations, designate critical infrastructure that requires mandatory protection and help investors better compare their companies’ cyber efforts. Successfully managing cyber resilience is necessary as organizations and executives face fines and other serious consequences. Potential repercussions mean board members must understand cyber risks and the best ways to mitigate them. This is easier said than done. The blog says 93% of companies are confident in their best practices mitigating cyber risks, while 57% expect to be hit by a cyber attack. Unfortunately, only half of these organizations have implemented suitable cyber measures. In 2021, the WEF and its partners published the Principles for Board Governance of Cyber Risk (the Forum’s Cyber Risk Principles), critical to driving resilience across industries. These guidelines (initially developed for corporate boards of directors) are summarized in six principles: Recognize that cyber security is a strategic business enabler. Understand the economic drivers and impact of cyber risk. Align cyber risk management with business needs. Ensure organizational design supports cyber security. Incorporate cyber security expertise into board governance. Encourage systemic resilience and collaboration. These principles represent a significantly different approach to resilience compared to how organizations delegate cyber security to IT, have a misplaced perception of the strategic nature of cyber risk and keep breaches under wrap. “Adopting the Forum’s Cyber Risk Principles demonstrates that individual organizations can significantly improve their cyber resilience without raising costs,” the release said. Source: asiainsurancereview.com

The future of some of the world's most important shipping lanes - including the Suez and Panama canals and other sea-facing port and terminal infrastructure - could be impaired from risks associated with climate change according to a new paper published by Marsh. The paper said this could have implications for regional economies, global food security, and supply chains in the medium and long term. The paper, High seas: Enabling a climate resilient Suez Canal, includes modelling data, examines how physical climate change-related risk is impacting major waterways, with the Suez Canal as a case study, and outlines methods to build resilience at a local level. According to the new research, rising physical climate risks, such as coastal inundation and extreme heat and wind events, could directly impact key shipping lanes and associated operations at ports and terminals along the routes. The paper highlights that rising sea levels are linked to coastal inundation risk and could challenge the integrity of infrastructure and port operations along the Suez Canal due to potential disruption to the loading, unloading, and movement of cargo. Further, the report states it could also affect the placement of infrastructure, including transportation and communication networks, industrial sites, housing and sanitation systems. In addition to potential navigational issues, the impact of an increase in extreme heat events can vary from productivity loss, such as impairment of the operations of businesses that use waterways and ports, to changes in sea salinity and density which affects engine cooling efficiency. While extreme heat events may not have an impact on the waterways directly, the report notes that broader risks arising from extreme heat could have other impacts which result in increased costs and delays for ship-owners and cargo. Marsh head of climate and sustainability risk Nick Faull said, “The Suez and Panama Canals, the Straits of Hormuz, the Bab-el-Mandeb, and the Straits of Malacca rank among the world’s most important waterways and represent a significant source of national income for countries that support trade along these routes. Climate-related events, such as the high winds that played a role in the grounding of Ever Given in 2021, could impair their long-term viability.” Source: asiainsurancereview.com

THE first marching order of newly minted Land Transportation Office Director Assistant Secretary Jay Art Tugade is to get rid of the two information technology (IT) system processes at the agency. This means only the Land Transportation Management System (LTMS) will be used for all transactions with the LTO, which means the system provided by Stradcom will finally be sidelined. For LTO customers, this is good news because the whole process becomes streamlined and all transactions do not need to go through two systems in order to be completed. The old IT service provider of the LTO has continuously been pestering the leadership of the Department of Transportation to allow them to return to their old job, even after their contract expired in 2018. This has been this pundit's biggest question — how an organization without contract or agreement can continue to do business with a government agency even with the fact that this is not allowed by law. Not to mention that during the helm of the old IT service provider, citizens doing transactions with the LTO had to suffer delays, non-delivery of documents and licenses, and even needed to use fixers in order to finish their business with the government agency. The LTO director that Tugade replaced said he only wanted Filipinos to run the IT system of the LTO and not a foreign entity. This is misleading because the LTMS is a software owned and operated by the LTO. Dermalog is only the software developer and maintenance provider. Anyway, now that we have a legacy leader at the LTO, we can rest assured that the improvement we saw during the previous administration can finally be continued. And we can expect better and faster service. Source: manilatimes.net

More people, than ever, are now taking concrete steps to protect their personal information and data from cyber attacks. While the progress is encouraging, poor cyber security behaviours remain far too common, according to the 2022 edition of the Chubb annual study on cyber risk. The Chubb Fifth Annual Study on Personal Cyber Risk revealed that in 2022, more than half of Americans and Canadians (51%) reported using multi-factor authentication to log into their online accounts, which is twice the level found in the 2021 survey. Nearly 80% say they prefer to use multi-factor authentication. Adoption of practices such as regularly clearing browser histories and using password protection apps, pop-up blockers and malware protection were also up significantly from 2021. People have trouble keeping track of their passwords and are annoyed when they have to change them. Three in five (61%) report having trouble keeping track of their passwords. A similar share (63%) gets annoyed when they are forced to update their passwords. Chubb North America personal risk services division president Ana Robic said, “Our fifth annual report on personal cyber risk has a compelling narrative: Awareness of and concern over cyber threats is high and growing. At the same time, people are annoyed and frustrated by taking actions to protect themselves online. Thankfully, the gap between awareness and action has started to narrow." "While the progress is encouraging, risky behaviours are still too prevalent. Individuals and families should remain vigilant in defending themselves against cyber perils and know that there are risk management solutions to help ensure protection in the event of a personal cyber incident." Source: asiainsurancereview.com