The insurance protection gap
The protection gap – underinsurance in emerging and developing economies and the gap between economic and insurance losses – the opportunity that is on every reinsurance CEO’s lips and which presents the largest opportunity to put excess risk transfer capital to use, requiring both traditional and capital markets support.
In a market that is faced with abundant and ongoing pressure, from excess capital, new entrants, the capital markets, reductions in buying, consolidation of reinsurer panels and difficult global financial market conditions, the reinsurance industry is focusing on the next big opportunity.
This opportunity provides both reinsurers and ILS fund managers with an opportunity to assist in building the world’s resilience to disaster risks, while providing rapidly paying post-event risk finance, at the same time as growing the world’s catastrophe risk markets.
It’s win-win for both sides, those in need of resilience and disaster risk financing and the re/insurance and ILS market which is keen to expand into new regions, perils and opportunities. Narrowing the protection gap is expected to be a key focus for years to come.
Insurance products, reinsurance and insurance-linked securities (ILS) are all examples of financial shock absorbers for climate change risks, but while it can encourage behavioural change through the sending of price signals, a new report from McKinsey highlights the reality that the sector business models may need to change.Leaders in business, read the full article →
For the first time in the history of the annual World Economic Forum's Global Risks Report all of the top five global risks in terms of likelihood are related to climate change and environmental issues.The report highlights the growing global awareness of the threat that climate related risks pose to read the full article →
The world's largest institutional investors are increasingly vocal about the need to accelerate efforts to tackle the climate crisis, with many of the same group also contributing a significant proportion of the insurance-linked securities (ILS) market's capital base.Last week, 631 institutional investors which between them are responsible for managing more read the full article →
Investment banking giant Goldman Sachs published an updated environmental policy yesterday, with catastrophe bonds, insurance-linked securities (ILS) and other climate related risk and reinsurance products again taking a central stage within it.Goldman Sachs recognises the importance of climate adaptation and the opportunity for its business in this area, with its read the full article →
The economic consequences of climate change may prove particularly severe for insurance and reinsurance companies in the property and casualty (P&C) space, presenting both a threat and an opportunity, but the latter may require access to capital to take full advantage of it.Recently, rating agency Moody's reiterated its stable outlook read the full article →
Global Parametrics, the parametric and index-based disaster risk transfer company, has launched a new natural catastrophe focused investment fund that has received backing from global reinsurance firm Hannover Re and the German government.Working with the German Federal Ministry for Economic Cooperation and Development (BMZ), the German Development Bank (KfW) and read the full article →
Climate change adaptation projects and the need for them are rising up the agenda, as a recent surge in damages from severe weather and climate related catastrophe events concentrates the mind on the importance of investing in this area.Public authorities are showing renewed and increasing interest in climate adaptation, while read the full article →
Global insurance and reinsurance group AXA has launched a new phase in its climate strategy and has announced a new parametric risk transfer service called FastCat as part of its commitment initiatives.AXA said it wants to accelerate its contribution to the transition as an investor, insurer and cooperation enabler, seeing read the full article →
China is set to significantly expand the roll-out of an agricultural disaster insurance scheme that has been in pilot mode since 2017, as it has found the results positive in helping small and mid-sized farmers protect their incomes and recover more rapidly from weather and natural catastrophes.The Chinese government first read the full article →
Non-life insurance pricing is expected to continue to strengthen, as rising loss costs in both property catastrophe and U.S. casualty lines drive a need for increased profitability, according to Swiss Re.The reinsurance giant said today that the non-life insurance and reinsurance environment is improving, with profitability on the rise.But there read the full article →