Transcript Headline Title

Insurability of Natural Catastrophic Risks
Underwriting Considerations
Graeme Owens
Global Property Executive, Eastern Zone, EMEA
AIG Property Casualty
6th International Istanbul Insurance Conference
25th September 2014
Insurability of Natural Catastrophic Risks
•
Introduction
•
Economic Cost / Insured Cost of Natural Catastrophe
•
Underwriting Considerations
2
3
Superstorm Sandy – Storm Dynamics
Courtesy: CoreLogic
4
Damaged Infrastructure
Courtesy: Twitter and ABC News
5
Water Street!
Courtesy:
6
2011 NATURAL CATASTROPHE EVENTS
Courtesy
Source: MR NatCatSERVICE2011
:
7
US Convective Loss Events
Overall and insured losses 1980 – 2012 and First Half 2013
(Bill. US$)
The insured and total
economic cost of
convective events has
rising tremendously
over the past 30+ years
50
40
30
Convective events
are those caused by
straight-line winds,
tornadoes, hail,
heavy precipitation,
flash floods and
lightning
20
10
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Analysis contains: straight-line winds, tornadoes, hail, heavy precipitation, flash floods, lightning.
Overall losses (in 2013 values)
Source: Geo Risks Research, NatCatSERVICE.
Insured losses (in 2013 values)
8
Underwriting Considerations
9
Randomness versus Certainty
 Increased Certainty
 Climate Change
Teleconnection
10
Climate Change - US Convective Activity
For the first time research shows that climatic changes have already
influenced US thunderstorm losses
11
Teleconnection - La Nina Effect

Source: Twitter and ABC News
12
Quantifiable
 Business Globalisation
 Complexity of Supply Chains
 Increasing Demand for Contingent Cover
 Just in Time Production
13
Recent Illustrative Events of CBI Impact
Tohoku Earthquake – 2011
14
Impacts of Globalisation on Supply Chain Risk
Insured
15
Shared responsibility
 Planning and Social Pressure
 Government vs Insurance accountability – Flood Re UK
16
UK Floods 2012

Source: BBCNews
17
Source: bbc
Economic and Mutuality Viability
 Risk Pooling
 TCIP - Turkey
18
Words of Wisdom……..
19
Modelled, Un–modelled, and Under-modelled Perils in 2011
US Winter Freeze CAT 36
Typhoon Roke
US Winter Storm CAT 35
Kitami Hail Storm
Hurricane Irene CAT 59
Japan
Earthquake
Typhoon Talas
US Winter Storm (Oct 30)
Tropical Storm Lee CAT 61
Thailand Floods
US Spring Storms CAT 42&43
Australia Brisbane Floods incl Cyclone Yasi
Brazil Landslide
Brazil Floods (Jan)
NZ Christchurch EQ CAT 04
Modelled Perils
20
Non – Modelled/Under
Modelled Perils
Natural Catastrophe Words of Wisdom
“There are known knowns. These are things that we know”
Modelled Exposures
• UK Flood
• US Wind and Earthquake
• European Wind
“There are known unknowns. That is to say there are things
we know we don’t know”
Undermodelled and Un- Modelled Exposures
• Japan Tsunami following earthquake
• New Zealand liquefaction following Earthquake
• US and Thailand Flood
• Fire following any event
21
Natural Catastrophe Words of Wisdom
“ But there are unknown unknowns. These are things that
we don’t know we don’t know”
Contingent Business Interruption
22
Bring
Bring on
on tomorrow
tomorrow
23
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