The results of the 2022 European Risk Manager Survey conducted by Federation of European Risk Management Association (FERMA) have been released. The biennial survey conducted in partnership with PwC France received 500 responses from 27 countries. The survey is conducted since 2001-02 and this is the first one to be completed since the pandemic. Exceptional? circumstances have happened since the last survey released in 2020. The survey found that the biggest threats for businesses in 2022 are linked or amplified by the global pandemic and Ukrainian crisis: Cyber threats, supply chain and disruption failure, geopolitical uncertainties, and uncertain economic growth notably with the increase in the cost of raw material and energy, and the issue of their availability as well as the inflation. Cyber attacks continue to be at the top of mind in the short (12 months) and medium-term (three years), while risks related to sustainability are two of the top three risks in the long term (10 years) with climate change the number one risk and natural disasters at number three. Results show the triple crunch in buying insurance protection that risk managers face: 78% are heavily impacted or face a major impact in terms of increase in premium 71% in terms of reduction in capacity 63% in terms of limitations and exclusions on specific risks As a consequence, risk managers are adapting their insurance strategy over the next two years focusing on risk retention (73%), using a captive (35%), creating a captive (12%), and using alternative risk transfer vehicles (29%). The interest in captives has gone up significantly over the past five years from 15% in 2018 to 47% today. In addition, 41% of the respondents believe that some of their company’s activities or locations will become uninsurable in the future illustrating the growing difficulty to insure risks that are seen as systemic (cyber, climate change and more). Most of the risk managers (91%) are involved in corporate strategy either fully, mostly, or partially. A growing number of risk managers is playing or planning to play a specific role regarding ESG-related risks in their organizations (56% against 40% in 2020) and 82% collaborate with the CSR/sustainability department with 32% having a close interaction against 20% in 2020. More than half the risk managers work closely with IT and information security on cyber risks or have it within their team. More than one-third of risk managers are directly involved in the management of risks related to the adoption of new technologies by their organization. Source: asiainsurancereview.com

Managed retreat is often considered a last resort, but perhaps it is time to consider it as a powerful tool to adapt to rising sea levels, flooding and other climate change effects according to Zurich Insurance. The Swiss insurer writing in a industry knowledge article said managed retreat involves the strategic relocation of people, buildings and other assets from areas vulnerable to climate change and natural hazards. It is not a new concept, but New Zealand’s announcement has certainly put it back in the spotlight. According to the Zurich Insurance document the phrase ‘managed retreat’ in this context was first used by coastal engineers in the early 1990s as a response to sea level rise in Essex, UK. It has since been viewed as a solution to global sea level rise that could impact up to 410m people by 2100. In some cases, managed retreat includes mechanisms such as ‘setbacks’ that either require new development to be a minimum distance from the shore or restricted in density. But the concept of relocating whole communities is gaining credence. Zurich Insurance Group head of flood resilience programme Michael Szönyi said, “In the past there was a long tradition of abandonment or managed retreat due to environmental or economic changes, such as drought or a loss of industry. “There may be a need to revive this tradition again. It is not sustainable to build larger sea defenses or levees along vast stretches of coasts or rivers. Other options will need to be considered. In some cases, managed retreat may even become a necessary response to the impacts of climate change in the decades ahead.” The document says there are challenges of managed retreat. People are not easily relocated from their homes. They build close attachments to their property, local culture and community, which can cause social and psychological difficulties – particularly if it involves loss of cultural heritage or moving a family from their ancestral lands. Source: asiainsurancereview.com

A new report has detailed the social and economic effects of climate-driven extreme heat through the prism of 12 cities, spanning six continents and covering an urban population of more than 123m. The report ‘Hot Cities, Chilled Economies: Impacts of Extreme Heat on Global Cities’ produced by Adrienne Arsht-Rockefeller Foundation Resilience Center says that climate-driven heat is changing the way we live and work. Extreme heat currently kills more people worldwide than any other climate-driven disaster. The 12 cities included in the study were Athens, Bangkok, Buenos Aires, Dhaka, Freetown, London, Los Angeles, Miami, Monterrey, New Delhi, Santiago and Sydney. The report reveals that the danger posed by extreme heat in urban centres - particularly in the global south - defies overestimation. By 2050, more than 970 cities will experience average summertime highs of 35°C (95°F) - nearly triple the 354 cities that already do. The urban population exposed to these sky-high temperatures will increase by 800%, reaching 1.6bn by 2050. Dense concentrations of buildings and paved surfaces absorb and amplify heat - especially in areas with little tree cover or green space - creating heat islands where poor and minority neighbourhoods often bear the brunt of broiling temperatures. Heat reduces labour productivity in a wide range of ways. Losses from heat-related reductions in worker productivity are high and mounting. In an average year, these losses total $44bn across the twelve cities in 2020 and the amount will rise to $84bn by 2050 without action to reduce emissions. Losses as a proportion of total output are high across the board, ranging from 0.1% in Santiago to 8.3% in Dhaka. To put the figures into a global context, estimated economic losses from all natural catastrophes were valued at around 0.3% of the world’s output in 2021. In addition to the $44bn, losses to productivity also affect sales, income, and real estate tax revenues: as losses grow, they will increasingly constrain cities’ fiscal room for investment in public services. These reductions in worker productivity may affect workers’ incomes. The effects are even more direct for hourly or informal workers who are paid only when they work and may face increasing work stoppages or choices between working in dangerous heat conditions or having no income. Cities in the global South face greater, more rapidly increasing impacts. These cities tend to have hotter and more humid climates, meaning they face a greater challenge from heat, and their more labour-intensive economies and lower access to active cooling technologies mean they are more vulnerable to heat. Source: asiainsurancereview.com

Farmers in Turkey have become increasingly aware of insurance, and more are taking steps to obtain coverage for their crops and livestock, according to Ms. Serpil Gunal, general manager and board member of the Agricultural Insurance Pool (TARSIM). According to a report by the state-run news agency Anadolu, Ms. Gunal said, "There has been an increase in total premium production. In 2021, TRY3.3bn ($177.6m) premiums were produced in all agricultural insurance branches." This year, the figure could reach TRY5.5bn, with the increase higher than the inflation rate. According to official data announced by the Ministry of Agriculture and Forestry, there were 2m farmers registered in the Farmer Registration System. Among them, 500,000 were insured last year. This year, the number has increased to 606,000 to date. Last year, TARSIM paid out TRY2.7bn compensation to farmers and breeders, whose crops, greenhouses, bovine and ovine animals, hives, poultry, and fishery products were damaged due to various risk events. This year, the pool has paid TRY2.1bn to date. "We anticipate that this amount will increase to TRY4bn by the end of the year," said Ms. Gunal. In her statement on developments in the state-supported agricultural insurance system, Ms. Gunal stated that the frequency and severity of natural disasters and risks were being increasingly felt more, because of the effects of global climate change. "This situation increases the tendency towards agricultural insurance. Our farmers have become more aware of insurance." Ms. Gunal also said, "The premium support provided by the state to producers is very important here. In the pool system implemented in our country, 50% state premium support is provided in all agricultural insurance branches. At the same time, the premium support for covering risk of frost on fruits in production is 67%. A special 70% state premium support is offered in drought yield insurance up to 2022." She added that the Income Protection Insurance programme, which was implemented last year in Konya's Cihanbeyli, Karatay and Kadinhani districts for wheat products, is being extended to all districts of Konya and work is progressing as well to implement it throughout Turkey in 2023. Founded in 2005, TARSIM has 16 regional offices across the country. Under the system, insurance companies issue insurance policies in their own name; however, the risks and 100% of the premium must be transferred to the Pool. The insurance companies can opt to take a share from the Pool through retrocession. Source: asiainsurancereview.com

Global insurers are innovating their investment approaches amidst rapidly-changing market conditions and focusing on resilient portfolio construction, liquidity management and integrated technology, according to BlackRock's 11th annual Global Insurance Report. The new report surveyed 370 insurance investors across 26 markets, representing nearly $28tn in assets under management. BlackRock Financial Institutions Group global head Charles Hatami said, "The current investment landscape is a result of major upheaval over the past two years and uncertainty is only expected to increase. The insurance clients with whom we partner understand that innovation at scale and a nimble approach will be critical to navigate the complexity ahead." More than three quarters (79%) of the insurers surveyed plan to review their long-term strategic asset allocation (SAA) and nearly half (48%) will review risk appetite thresholds this year. Most insurers (60%) reported inflation as their top market concern, with asset price volatility (59%) and liquidity (58%) close behind. To further diversify their portfolios, most insurers (87%) plan to increase allocations to private investments over the next two years, which would represent a 3% average increase versus their current allocation. Insurers also plan to increase allocations to liquid assets, suggesting a barbell approach, with 37% of respondents intending to allocate to cash and 31% to fixed income. More than two-thirds of the survey respondents reported they are either likely or very likely to implement broad ESG targets in their portfolios in the next 24 months. In addition, 85% reported they are either likely or very likely to commit to specific climate objectives for their portfolio. Two-thirds (62%) of the insurers surveyed see decision making related to sustainability as a major trend shaping their industry in the coming years. The right technologies and tools will be critical for insurers to ensure consistency across sustainability analytics, with applications including regulatory disclosure and reporting, through to evaluating investment allocations. Sixty-five percent of insurers reported digital transformation and technology as the most important trend in the insurance industry over the next 12-24 months, compared to 44% in 2021. Nearly all (98%) reported using AI, machine learning, predictive analytics, blockchain, or a combination of these technologies, with predictive analytics being utilized both for the management of insurance business (65%) and investment operations (72%). When it comes to future tech spend, the vast majority of insurers surveyed plan to prioritize investments for asset and liability management (68%), along with regulatory compliance (54%) and market data (53%). The surveyed insurers reported they plan to increase the use of fixed income ETFs in their portfolios, primarily to potentially improve liquidity (54%) and yield (48%). According to BlackRock research, eight of the ten largest US insurers now report using bond ETFs, with five having adopted them after the volatile markets of March 2020. BlackRock recently forecast that global bond ETF assets under management could reach $5tn by 2030 – and insurance investors are a major driver of this new approach. Source: asiainsurancereview.com

Hong Kong-based digital insurer Bowtie recently decided to do its part in narrowing the protection gap by reducing the prices of premiums by up to 50%. According to Bowtie co-founder and co-CEO Fred Ngan, there are many insurance companies in Hong Kong, so it was surprising that the market still had a HK$6.9tn protection gap. “This means that every working adult is facing a $1.9m protection gap,” he said. Their solution is to shorten the onboarding process and reduce its cost by removing from the equation intermediaries such as insurance agents. The processes of explaining to customers in detail the policies and benefits, applying their insurance for them, and assisting them with their claims usually take several days or even a week. Bowtie also employs a self-serve digital platform, where customers can access all the products and pricing information. Without agents and commission fees, the insurer can afford to reduce its premiums. He said that they can do away with agents as Bowtie is adamant about its transparency. The younger consumers, which is most of their client base, want to understand the terms of their policies fully before buying insurance. “We’re very transparent with premiums. Customers can access all the information they need for their purchase decisions which is a very important element to building trust,” he said. “Our process is automated. It is a lot more effective and efficient when we use technology to engage customers online.” Expanding into Southeast Asia In its last funding round in 2021, Bowtie raised $22.6m in a series B funding round. The round was by Mitsui & Co., with participation from existing investor Sun Life Hong Kong. Mr. Ngan said they are planning another funding to raise more capital but did not mention when it would be. The insurer is currently focusing on going beyond Hong Kong and entering other markets in Southeast Asia. Bowtie is eyeing Vietnam as one of the markets it identified that has much potential. He added that they are in the midst of doing research in some SEA markets. “The fact that the business model worked in Hong Kong, we think we can replicate it. We have been launching some content marketing in different markets as a way to understand the customer demands in these markets,” he said. He said that with more and more accepting online insurance, he does not see this trend slowing down. “By buying online, consumers will save money and save time. Right now, in surveys, online adoption is just a few percent. However, if you look at a lot of surveys, especially for the younger generation, at least 50% of them will consider buying online for a simple insurance product,” he said. Source: asiainsurancereview.com

A new study from AXA UK has revealed that almost half (48%) of small business owners feel they have nobody to confide in about the problems and stress they are under. The new research which is part of the SME Wellbeing Report from AXA UK has revealed that two in three do not think they can talk to friends or family about the stress they feel because they don’t want to worry them and 48% find it hard to know who they can talk to about their business troubles. As a result, 44% of the 500 SME owners polled for the report feel they are unable to do the best possible job for both, themselves and their staff. The cost-of-living crisis (45%), finding new customers (37%) and inflation (35%) are among the things which stress out SME owners most. AXA UK CEO Claudio Gienal said, “It can be a very lonely place being an SME owner, which is why it is so important to ensure you can confide in someone who can relate to how you feel. Especially for those who have built much of their business alone, it can feel very strange opening up about what is going on in your workplace. Mr. Gienal said, “When it comes to looking for support, there are many avenues business owners can take; for example, having robust insurance can help to take a weight off the mind.” It is a different picture when it comes to communicating with members of staff as more than a third (34%) of those with employees on the payroll say they are very open with them about potential issues the business could encounter. However, a further 38% will only reveal a selected amount of information relating to the problems which they could face. When it comes to staff wellbeing, more than half say they genuinely care about their staff and 44% are striving to create a positive work culture. In fact, two out of five take an active interest to strengthen the relationship between them and their staff, while 36% believe it is important for staff retention. Many SME owners really recognize the importance of wellbeing and are doing everything in their power to create a space where members of staff feel comfortable talking about their concerns. Source: asiainsurancereview.com

Last Call to all ASEAN Young Managers: This is your last chance to register for AYIM 2022, please Register on or before 31 July 2022! AYIM EXCELLENCE AWARD The AYIM Excellence Award is an award introduced to coincide with the 10th year anniversary of AYIM and will be presented to the top performer at AYIM 2022. The winner will receive an award and a special certificate acknowledging his/her achievement as well as a complimentary registration to attend AYIM II. Register now and see you in Bangkok! For more information, click link https://www.scicollege.org.sg/ayim2022/ or please contact the AYIM Programme Manager at the Singapore College of Insurance. Tel: (65) 6221 2336 Fax: (65) 6220 6684 E-mail: AYIM@scidomain.org.sg For Indonesian participants, please call AIC Secretariat at 021-29069760 and look for Ms. Tita, if you need assistance regarding registration.

WTW and the University of Cambridge's Centre for Risk Studies have launched an Airport Risk Index. The index allows the world's airports will be able to introduce new risk profiling methods to future proof their resilience planning. The index compares 110 of the world’s busiest airports by passenger volumes, against 19 identified threats. It offers airports the ability to interrogate their existing and future assumptions on risk exposure. It combines historical and predictive analysis, to determine the levels of probability and impact of operational disruption on an airport’s profitability. WTW CEO global airspace John Rooley said, “In line with our WTW data-led strategy, we‘re driving change across the aviation eco-system. This Index will deliver new perspectives and challenge how industry measures and manages risk.” Centre for Risk Studies director Dr Trevor Maynard said, “The Centre and WTW collaborated to create this index which will empower leaders in the aviation world, through data-driven insights, to inform risk resilience.” WTW Research Network director Hélène Galy said, “Understanding risk and driving resilience are still best met working in partnerships and embracing the talents of people across the globe.” With the airport risk index framework, airports will be able to reassure governments, regulators, investors, insurers and business partners that they have a renewed understanding of their risks and the necessary mitigation strategies. Source: asiainsurancereview.com

With a population that has truly embraced mobile technology, Indonesia has in recent times attracted the attention of many InsurTechs. We spoke to Igloo’s Mr. Raunak Mehta to get a better idea of what InsurTechs are doing in the market. By Amir Sadiq The last few years have seen a surge in the number of InsurTechs setting up operations in Indonesia, highlighting the potential for growth of the insurance sector, as well as the country’s readiness to embrace technology. Speaking to Asia Insurance Review, Igloo co-founder and CEO Raunak Mehta said that Indonesia has always played a pivotal role in terms of being at the forefront of digital adoption in Southeast Asia. Providing tech solutions to insurance companies, Igloo has been operating in the country since 2019. “If you look at internet penetration itself, you’re talking about a good 70% of the population that has access to internet. Smartphone penetration is also fairly high. And I think you need these kinds of macro trends to be able to bring up an industry that’s based on data and technology and InsurTech is no stranger to that,” he said. He added that the momentum for InsurTechs in the country has also been helped both by the fact that insurance penetration rates are still fairly low compared to the global average and that there has been a surge in digitalization throughout COVID-19. Gamer’s insurance Mr. Mehta highlighted several areas of insurance in which InsurTechs help to strengthen, one of them being product innovation. InsurTechs pride themselves in being able to come up with innovative ideas and bring new insurance products that are catered to the needs of certain market segments. One segment that Igloo has tapped into recently has been the gaming market in Indonesia. The InsurTech has partnered Indonesian e-wallet DANA to offer insurance to the gaming community. The product covers heart attacks and carpal tunnel syndrome. Carpal tunnel syndrome is just one of the serious health issues that gamers are susceptible to, Igloo said in a statement. According to German Sport University Cologne research associate Chuck Tholl, in an article on The Washington Post, professional gamers perform as many as 400 actions per minute which range from movements like mouse clicks and keystrokes that place a physical load on their fingers, wrist, neck, back and lower arms. Over time, these repeated movements may lead to a variety of ailments like muscle weakness, tendinopathy, nerve compression and lower back pain. In July 2021, an Indonesian e-sports player Tuturu announced his early retirement due to a severe case of carpal tunnel syndrome. According to a study by National Center for Biotechnology Information, the prevalence of carpal tunnel syndrome can be as high as 150 cases per 1,000 people per year while with a prevalence of 500 per 1,000 people in high-risk groups. “As most of these ailments are chronic and harder to detect, professional gamers like Tuturu often continue to play unaware that they already have underlying injuries. In the worst cases, reports also show that extended periods of gaming may lead to fatal heart attacks,” it said. Video games have gained significant traction over the last few years in Indonesia – according to Statista, revenue in the segment is projected to reach $1.077bn this year and is expected to show an annual growth rate (CAGR 2022-2027) of 7.13%, resulting in a projected market volume of $1.52bn by 2027. Areas of focus for InsurTechs Mr. Mehta also highlighted the main areas in which InsurTechs are driving insurance penetration in Indonesia. Like many other markets post-COVID, there is a much greater focus on both physical and mental wellbeing, resulting in a greater demand for associated products and services. Meanwhile heightened levels of inflation, that are affecting the purchase of goods and services in daily life, and hardening interest rates are providing strong tailwinds for products such as credit insurance. “These are the areas where I’m seeing InsurTechs, in a way, stepping up and really driving insurance penetration in Indonesia, which has improved quite significantly over the last three to four years. It’s still not at the right levels, but it’s very encouraging [growth],” he said. Improving accessibility and reducing costs Technology providers like Igloo have carved a niche for themselves in the insurance industry, focused on helping insurers reach a wider range of consumers and lower their operating costs. “Traditional insurers in Indonesia are waking up to the idea of using digital platforms as a strategic channel for the distribution of insurance, because it doesn’t just solve the accessibility problem, but it also brings down the cost of distribution. And InsurTechs, by virtue of their DNA, play a very critical role on that front,” said Mr. Mehta. The cost reduction will primarily be seen in a few areas. “When you are distributing insurance products via digital platforms, the percentage of the overall premiums that you’re spending on distribution is going to be far less than traditional [distribution],” he said. “And because you are bringing it to a wider market, there is diversification of the risk pool, so the claims are at a more subdued level and there is a lot of fraud mitigation. Overall, the amount of money you spend on that goes down.” With increased volume of claims also comes the need for more processing power and technology will allow insurers to scale up their claims processing with minimal impact to cost, rather than manually adding more people to handle them. What lies ahead Over the last decade or so, there has been a substantial amount of funding being poured into InsurTech development. But current global economic volatility has already seen this money diminish, which will, in turn, necessitate better management of finances. “With the tightening that the central banks are doing, there has already been a flight of capital and there will be more flight of capital. So, I think the most important thing for InsurTechs is how they are managing their cash, which will become extremely critical going forward,” he said. In addition, such global headwinds will also present the opportunity for InsurTechs to innovate a wider variety of products to mitigate the risks presented by inflation. And then there are regulations that need to be taken into consideration. “Regulatory changes are going to happen over the next six to 12 months. As inflation comes in, government authorities will start dialling down on the accommodative policies that they’ve had in the past,” he said. He added that regulations will also be tightened to weed out unsustainable players from the market and InsurTechs need to be prepared for these. “I think you have to be on the front foot and be very proactive with respect to anticipating the regulatory changes that are going to come about,” he said. Source: asiainsurancereview.com