On behalf of the East Asian Insurance Congress committee, it is our pleasure to confirm Asia Insurance Review as event manager and sponsorship sales representative for the Diamond Anniversary Virtual Conference of the EAIC scheduled for the 21st – 22nd September 2022. As this is a milestone celebration of EAIC’s history and place in the insurance industry over the past 60 years, we look forward to your active support and participation as we put together a high-level programme. We are delighted to work hand-in-hand with Asia Insurance Review’s 31-year history of serving the market in celebrating and acknowledging this milestone event. The EAIC was founded in 1962 with the aim of furthering and developing international collaboration in the field of insurance. In line with the Diamond reference, the theme of the event will be “Cutting a Multi-Faceted Clear Vision for the Industry.” Please join us at our Diamond Anniversary virtual extravaganza. We look forward to seeing you at the event and welcome your valued support as a sponsor. For more information about the event and to register, click here.

A new analysis by UK parametric insurer FloodFlash has revealed in detail the flood risks facing businesses. According to the study the biggest risk may be one the businesses have not even considered. The 2022 Commercial Risk Report by the insurer provides an up to date view of the flood data and says that the average cost of flood damage in a commercial setting is around £80,000 ($95,875). Meanwhile a small business can lose up to 50 working days following a flood event, which clearly leads to a loss of custom and orders, puts shipments on hold and impacts organizational reputation deleteriously. Based on the analysis which was conducted for the businesses in Britain, the top five flood risk facts that the businesses simply cannot afford to ignore are: 1. 40% of small businesses close for good after catastrophic flooding. According to the analysis, 52% of small businesses say it would take at least three months to recover from a disaster but 90% of smaller companies fail within a year unless they can resume operations within five days following a disaster. 2. 27% of commercial properties are at risk from flooding, twice the rate of flood risk facing domestic properties. For around half of those business, the picture is even worse – 14.4% of commercial properties (one in eight) is subject to significant flood risk, while a total of 18% face a moderate risk. 3. Of the commercial properties at risk from flooding, 80% are at risk from surface water. Surface water flooding, or ‘flash flooding’ happens when intense localized rainfall quickly saturates the ground, preventing it from soaking away, and overwhelms drainage systems and the results can be catastrophic. 4. Retail and industrial properties make up over half of those facing flood risk. Retail is the most at risk sector, making up nearly one third (32.5%) of the commercial properties at risk and 58% of retail companies report that they don’t have comprehensive insurance cover for flooding in place. By contrast, while manufacturing, wholesaling, and logistics properties account for more than 20% of those at risk, 76% of these companies report that they do have comprehensive insurance, including flood cover. Office-based businesses represent the third most at risk sector, making up around 10% of those at risk – and, here, around half of those business say they are insured against flooding. 5. Nearly half of the businesses flooded in the past 10 years experienced a period of business disruption. The interruption of normal business operations is one of the most damaging aspects of a flood event. The study found that overall, just 35% have developed comprehensive flood resilience plans and less than half (42%) have in place the business interruption insurance that – with the right level of cover in place - can play a very vital role in strengthening flood resilience by helping the business to recover quickly, covering unexpected costs (from replacing equipment and stock to re-wiring and refitting), and replacing lost income. Source: asiainsurancereview.com

While the impact of the pandemic and conduct risk remains high on the risk agenda for insurers, the gross losses in operational risk are continuing to fall according to the latest ORX annual loss reporting figures. The latest ORX report reveals that operational risk losses reported by global insurance companies continued to fall in 2021 despite the challenging operating environment. The global loss figures report a decline in total gross loss across the insurance community. This is despite the challenging environment created by both external threats, including geopolitics, cyber risk, the economy, and internal developments, particularly as the industry moves to digitalize. In 2021 there were 1,155 operational risk loss events (submitted) totaling EUR522.8m ($530m) in gross loss. The lower total gross loss – with the exception of 2020, total gross loss has remained reasonably steady year on year since 2018. There was a significant spike in 2020 at EUR1.2bn due in part to coronavirus related losses, while 2021 saw the lowest gross loss since 2017. The average annual gross loss from 2016-2021 is EUR752m. Total number of events reduces slightly – the annual loss frequency was slightly lower in 2021 than the average for 2016-2021, with 326 fewer loss events submitted than in the previous year. Size of average risk loss event - the average size of an operational risk loss event in 2021 was EUR452,607. In 2020 the average size of a loss was almost double this at EUR823,232 due in part to large coronavirus losses as well as large events classified as ‘transaction, capture execution and maintenance’ which includes losses due to poor execution of regular business tasks for example accounting and data entry errors. The life business line experienced the largest proportion of total gross loss in 2021 (41%), whilst non-life business lines incurred 39%, corporate level losses 17% and asset management with 4% of the total gross loss. ORX director of research and information Steve Bishop said, “This year we’ve seen a significant reduction in gross loss. Given the levels of change facing global insurance and the turbulent external environment, it will be interesting to see if the reduction continues through 2022. “Next year’s results could well reflect a number of factors, including the impact from the Ukraine conflict, losses related to the increasing cyber security threat and to economic turbulence, in particular arising from supplier issues, conduct or external fraud,” said Mr Bishop. The onset of the pandemic has also altered the operational risk landscape and the risk profiles of financial institutions. In 2021, conduct risk remains a concern for insurers and an area of strong regulatory focus, not least because this risk type can cause large losses to financial institutions. 199 conduct events were reported in 2021, amounting to EUR182.6m gross loss. Source: asiainsurancereview.com

The 13th AYIM 2022 is back on site! The ASEAN School for Young Insurance Managers, or AYIM, is one of the initiatives under the ASEAN Insurance Education Committee, designed to develop promising, high-potential young ASEAN Insurance Managers into multi-faceted leaders with an integrated view of management fundamentals and a broad market vision to assume the cross-functional responsibilities expected of company and industry leaders. For more information download the eBrochure here.

By Herminia S. Jacinto THE Insurance Institute for Asia and the Pacific and Insurance Philippines held their 2nd Virtual Summit on June 22 and 23, 2022 with the theme "Climate Change — The Role of the Insurance Industry and the Public Sector." Climate change may seem to be a jaded topic in various forums, especially those conducted by the insurance industry. On the contrary, the topic is always relevant as it affects our daily existence. Typhoons, floods, earthquakes and volcanic eruptions are events that happen or may happen whether we like it or not. Invited to this summit were speakers representing global organizations and projects like the World Bank, the Earth Security Group and Project Oasis. Updates on local initiatives, both the public and private sector, were presented by speakers from the Climate Change Commission, the Department of Energy and Arise Philippines. I would have wanted to share with the readers some of the interesting and informative papers presented but since we have limited space, I will just highlight some of the valuable takeaways from their papers. Almost all speakers talked about the research and data analytics of the various events or disasters that were caused by climate change. Very useful information that will help people, governments and the private enterprises cope with these disasters, and look for the necessary protective mechanisms for themselves affected to recover from their losses. These organizations offer their assistance in research, loss analysis and estimation, development of insurance products and risk financing. An interesting topic to me (a longtime insurance person) was the topic "Insurance Underwriting with Nature" presented by Mr. Alejandro Litovsky, the founder and CEO of Earth Security. Their studies show that there are local protective measures that can be done to provide protection for disasters like typhoons and floods. That in the Philippines, mangroves are 50 times more cost-effective than building a concrete sea wall over a 15-year investment! The Philippines has many strategic places with mangroves and coral reefs that can prevent or reduce flooding. The experts advise that there should be programs that will protect and strengthen the ecological systems of the country. It may be worthwhile for all the insurance underwriters to visit the website of Earth Security and read their paper on Underwriting with Nature. Our Climate Change Commission should include these in their key projects and flagship actions which are food security, water security, and ecological and environmental stability. One speaker mentioned that disasters threaten public finance and power, and the way to go for some countries like the Philippines is through risk financing. There should be enough data to support the funding requirement and how the funds will be distributed if the assistance is given. They want to make sure the funds reach the intended beneficiaries. The LGUs (local government units), down to the barangay (village) level, can be the designated distribution system since they know the immediate requirements of their units better. The municipal and city governments should consider climate change as one of their regular functions and not rely solely on the provincial and national governments to take care of climate change-related issues and problems of their localities. Statistics all over the world show that there is a big gap between actual losses from catastrophes and insured losses. Initiatives by insurers and reinsurers include research and development of risk models and solutions. The Philippine National Reinsurance Corp. is now in collaboration with Project Oasis which intends to provide solutions and products to lessen the impact of climate change in the country through the use of risk assessment models and software. There is an abundance of solutions provided by experts in climate change globally. The challenge is how the Philippines can use these models that can be used to build its own infrastructure in risk protection. Climate change and its impact on the country's resources should be a priority item in the plans and programs of the new administration. Budget should be provided for an organized system of disseminating information to the local governments and make these accessible to every Filipino. Ted Torres, a veteran journalist, now semiretired but devoting more time to several advocacies, was at the summit and his reaction to the papers was: "We should declare a climate emergency to give it the attention it needs!" Source: manilatimes.net

Ang Personal Equity and Retirement Account o PERA, ay isang boluntaryong retirement account na maaaring buksan ng isang qualipikadong indibidwal. Kung ikaw ay Pilipinong may tax identification number o TIN at may kakayahang pumasok sa isang kontrata, maaari kang maging PERA contributor. May PERA digital platforms na kung saan maari nang magbukas ng PERA account at magtransact kahit kailan at kahit saan gamit ang computers, cellphones, tablets, at ibang gadgets. Para sa iba pang impormasyon bisitahin ang mga sumusunod: https://www.facebook.com/BangkoSentralngPilipinas/videos/3141618459281870/ https://www.bsp.gov.ph/SitePages/InclusiveFinance/InclusiveFinance.aspx#PE

More insurance companies are now geared toward complying with the PHP1.3bn ($23.6m) net-worth requirement under the Insurance Code as 31 December 2022 fast approaches, says Insurance Commissioner Dennis Funa. Based on quarterly Financial Reporting Framework (FRF) reports of licensed non-life insurance companies as of 30 September 2021, 23 out of 52 insurance companies are already compliant with the PHP1.3bn requirement. Of the remaining 29 non-life insurers, 17 companies have a net worth exceeding PHP1bn; three have a net worth exceeding PHP950m. Among life insurers, 19 out of thirty-one 31 already comply with the minimum capital requirement pf PHP1.3bn. Out of the remaining 12 life insurers, seven companies have a net worth exceeding PHP1bn, and two companies have a net worth exceeding PHP950m. Under the Insurance Code, insurance companies are required to add PHP400m to the prevailing minimum required capital of PHP900m by 31 December 2022. However, last month, local media reports said that the insurance industry has renewed its pleas to the Insurance Commission (IC) to postpone the mandated increase in their minimum capital of PHP1.3bn set for this yearend. Both the Philippine Insurers and Reinsurers Association (PIRA) and the Philippine Life Insurers' Association are urging the regulator to delay the increase in the minimum capital. Source: asiainsurancereview.com

A Singaporean insurance firm affiliated with the regional e-retailer Shopee has entered the Philippine insurance market after it acquired two licensed Philippine non-life insurance companies. The two insurers are AA Guaranty Assurance (Aaga) and Reliance Surety and Insurance (RSI), reported Business Mirror. The Insurance Commission (IC) has approved the acquisition of Aaga and RSI by SeaInsure PG, an insurance firm under tech conglomerate Sea Ltd, Shopee’s holding company. “Sea Limited’s entry into the Philippine insurance industry through SeaInsure’s acquisition of these two local insurers is a significant milestone to the development of the local digital insurance business and InsurTech,” Commissioner Dennis Funa said. SeaInsure acquired RSI in February this year and converted it from a non-life to a life insurance business. A new certificate of authority to transact life insurance business shall be sought from the regulator in line with the Insurance Code. Aaga has been rebranded as SeaInsure General Insurance (SeaInsure Philippines) and was launched as a digital insurance company after it was acquired by SeaInsure in February last year. SeaInsure Philippines has also been granted with a license by the IC, authorizing it to transact non-life insurance business. The IC said it approved last March the transfer of RSI’s non-life insurance portfolio to SeaInsure Philippines. Source: asiainsurancereview.com

Join us on our upcoming webinar entitled “Ignite: Fortifying Tomorrow” on Wednesday, 13 July 2022, at 2PM. Participation at the event is free of charge, but registration is compulsory.

The National Reinsurance Corporation of the Philippines (Nat Re) is looking forward to new gains in 2022 on the back of improved economic prospects at home, brought about by the relaxation of COVID-related restrictions and a more robust life reinsurance segment. "We are optimistic of recapturing gains in light of the improving economic environment, while remaining mindful of ever-present natural disaster threats and geo-political risks at home and abroad,” said MR Allan R Santos, Nat Re president and CEO, in a statement. Following a robust 7.7% growth in the fourth quarter of 2021, the Philippine economy grew by 8.3% in the first quarter of 2022, with the main contributors being manufacturing, wholesale and retail trade, repair of motor vehicles and motorcycles, and transportation and storage, according to the Philippine Statistics Authority. This came amid various local and international headwinds, notably Typhoon Odette in December 2021, and the Ukraine-Russia war that began in early 2022, with the latter negatively fuelling inflation worldwide. “We have been providing claims processing support and guidance to our cedants affected by the typhoon. We also have reduced and continue to underweight our investments in equities while taking advantage of the increase in yields of fixed income securities, factoring in inflation in pricing and managing insurance coverages.” Mr Santos said. Meanwhile, AM Best, the world’s first credit rating agency, forecasts Nat Re’s underwriting in 2022 to be backed by a more streamlined portfolio and the company’s domestic life reinsurance segment. “AM Best expects the company’s prospective underwriting performance to be supported by ongoing portfolio remediation measures, including reduced participation or exiting from loss-making non-life treaties, as well as business growth in the more profitable domestic life reinsurance segment,” AM Best said in a press release on Nat Re’s credit ratings. Last June 2022, AM Best affirmed Nat Re’s B++ (Good) Financial Strength Rating and bbb Long-Term Issuer Credit Rating, with an outlook of 'Stable'. In addition to expected growth in the company’s life and health reinsurance businesses amid heightened awareness on the need for life and health insurance), Nat Re also expects to participate in the Philippine Catastrophe Insurance Facility (PCIF) launch this year. CAT facility The PCIF also aims to address the catastrophe insurance gap and create a more risk-appropriate rating environment to ensure sustainable catastrophe premium rates, among other goals. Through the PCIF, Nat Re helped to initiate a review of the minimum tariffs for earthquake and typhoon risks, which have not been updated for more than a decade. The new schedule of minimum tariffs, which were set to improve the sustainability of catastrophe insurance, will soon be implemented. Nat Re provides life and non-life reinsurance capacity, and in relation to this offers consultancy, technical, and advisory services to its clients—the direct insurers—in emerging markets. Source: asiainsurancereview.com