Bermudian reinsurer RenaissanceRe (RenRe), through its Singapore division, is set to be the lead reinsurance company on a roughly $100 million program for a Sri Lanka government backed natural catastrophe insurance facility, according to reports.
The natural disaster and severe weather risk insurance scheme is now entering its second policy year and RenRe Singapore has won the right to lead the renewal of reinsurance coverage for the facility, alongside a number of other global reinsurance providers, including Lloyd’s of London syndicates, a report from local news source LBO stated.
For the 2017/18 policy year the natural disaster insurance facility will cover an increased range of catastrophic and weather related risks, with the policies provided by the Sri Lankan government to be underwritten in the global reinsurance markets.
The insurance offers coverage for both property and life risks to homeowners and small businesses in Sri Lanka, covering tropical cyclones, storms, flooding, landslides, earthquakes, tsunamis and other similar natural perils, but excluding drought.
Businesses are covered if their turnover is below a pre-defined threshold, while households are automatically included, with maximum payout limits applied.
Economy Next, another local news source, said that RenRe submitted the winning lead terms under a bid managed by brokerage Strategic Insurance Brokers (Pvt) Ltd. working with Crescent Global South Asia (Pvt) Ltd. The annual premium cost to the Sri Lankan government was reported to be Rs816,750,000, which is almost $5.3 million.
The Sri Lankan National Insurance Trust Fund (NITF) was established to ensure a source of capital could be made available to citizens when disaster strike, with the government of the country electing to utilise the private reinsurance markets to ensure affordability.
A technical review had been undertaken this year, which found that reinsurance was required to ensure the facility could pay out without the government suffering any major drawdowns on its own finances.
Payouts of up to 2.5 million rupees are due under the facility for damaged properties while 100,000 rupees is the maximum payout for lives, we understand.
The account win by RenaissanceRe will be seen as a sign of the reinsurers ambitions to become more global in its view, having been a Florida and U.S. focused catastrophe underwriter for so many years. RenRe will have come up against stiff competition from other global reinsurance majors in order to win the lead reinsurer position on the Sri Lanka disaster facility program.
It’s not known whether RenRe utilised any capacity from its third-party capital backed joint-ventures or ILS vehicles for this program.
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