catastrophic risk and insurance hurricane and hydrometeorological risks catastrophic risk and...
TRANSCRIPT
Catastrophic Risk and InsuranceCatastrophic Risk and InsuranceHurricane and hydrometeorological risksHurricane and hydrometeorological risks
ASSAL XVII Annual MeetingVII Conference Insurance Regulation / Supervision Latin America
Lisbon, Portugal, April 24 – 28, 2006
Dr. Sebastian Aschenbrenner-von Dahlen (BaFin) Member of the IAIS Reinsurance Transparency Group International Association of Insurance Supervisors (IAIS)
2
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Introduction / Introduction / IntroducciónIntroducción // IntroduçãoIntrodução
¡Estimados señoras y señores!
Perdónenme que mi presentación sea en inglés. Mis escasos cononcimientos del español y portugués me permiten solamente decirles que pueden sentirse dichosos de que me estoy limitando a esta sola página.¡Muchas gracias!
Estimados senhoras e senhores,
Peço desculpa por proferir a minha conferência somente em língua inglesa, mas os meus escassos conhecimentos das línguas portuguesa e espanhola são apenas suficientes para lhes comunicar que se podem considerar felizes que agora acabo por continuar a falar apenas em língua inglesa.Muito obrigado!
3
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Hurricane KatrinaHurricane Katrina 2005 2005
Importance of reinsurance coverage
4
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Insurance supervision and catastrophesInsurance supervision and catastrophes
Today’s content
• Background concerning IAIS• Storm and flood impact within
ASSAL• Role of National Supervisors /
A brief case study• IAIS Global Reinsurance
Market Report
5
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Importance of the IAISImportance of the IAIS
IAIS Mandate• Standards and guidance for insurance
supervision
• Assist national supervisors
• Promote cooperation among insurance supervisors
• Coordinate with other financial sector and international organizations (Basel Committee, IOSCO, Joint Forum, Financial Stability Forum, etc.)
6
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Structure of the IAISStructure of the IAIS
IAIS and Reinsurance Transparency
Secretariat
Budget Committee
…
…
…
Reinsurance and Other Forms of Risk Transfer Subcommittee
Reinsurance Transparency Group (RTG) …
Executive Committee
Association in General Meeting
…
Technical Committee
…
…
…
…
Implementation Committee
7
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Hurricane and hydrometeorological risksHurricane and hydrometeorological risks
Storm impact within ASSAL in 2005
• Emily: Mexico, and Gulf (July) € 200m insured loss, € 450m total damage
• Stan: Mexico, and Guatemala (October) € 150m insured loss, € 2.4bn total damage
• Wilma: Mexico, Jamaica, Haiti (October) € 8bn insured loss, € 16bn total damage
8
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Hurricane and hydrometeorological risksHurricane and hydrometeorological risks
Flood impact within ASSAL in 2005
• Venezuela, Colombia (February) Heavy rain: > 100 dead, ~ € 50m damage
• Brazil, Guatemala, and El Salvador (June) Landslides: > 80 dead, > 2000 homeless
• Colombia (September until November) Mudslide: > 100 dead, > 180 000 damaged houses
9
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Global perspectiveGlobal perspective
• 10 largest insured losses
8 storms (6 hurricanes)
• Occurred since 1990 5 hurricanes in 2004 and 2005
Ivan, Charley; Katrina, Rita, Wilma
Katrina: largest insured event ever
~ € 50bn insured losses
~ € 120bn total damage
Importance of hurricanes
10
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Role of National SupervisorsRole of National Supervisors
Insurance and Reinsurance
• Katrina proved that the (re-)insurance industry is ready to bear very large losses
• Insurance Supervisors play an important role in the context of catastrophic risks
Appropriate coverage for primary insurers
11
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Brief case study for National Supervisors Brief case study for National Supervisors
Order of events during the case study
• Read and answer the case (3 minutes)– Everybody receives one case study (A or B)– Each case study describes one insurer – Read it (identical text in three languages)– Answer the question (one) at your case study
• Presentations (1 minute each)– Each case (A and B) shall be presented by one
person.
12
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Case Study …Case Study …
… all participants are solving their case
• Case A ( = Insurance company “A”)
or
• Case B ( = Insurance company “B”)
Good luck!
13
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Case Study – Solution ACase Study – Solution A
Insurance Company “A” ( = case A)
• Description of insurer “A”– “A” is a medium sized insurer, with a focus on
potentially catastrophe affected business – “A” bought only quota share reinsurance
• Solution – Buy not only quota share but also excess of
loss reinsurance coverage!
14
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Case Study – Background information ACase Study – Background information A
Quota share treaty
0
20
40
60
80
100
120
140
160
Risk A Risk B Risk C
Insurer's share (70% ) Reinsurer's share (30% )
15
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Case Study – Solution BCase Study – Solution B
Insurance Company B ( = case B)
• Description of insurer “B”– “B” is a medium sized insurer, with a focus on potentially
catastrophe affected business – “B” bought its reinsurance protection only at one reinsurer
“RCB”; “RCB” is a weak company
• Solution – “Do not put all eggs into one basket”
16
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Case Study – Background information BCase Study – Background information B
Diversification and financial strength
• Reinsurance protection should be bought at – Strong, and financially healthy reinsurers– More than one reinsurer (“eggs in the basket”)
• Judgments concerning financial strength– Home supervisors– Rating agencies– Capital market indicators
17
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
IAIS Reinsurance Transparency GroupIAIS Reinsurance Transparency Group
Global Reinsurance Market Report
• Strong capital base of reinsurers
• “Hurricane Katrina losses are not expected to have a material impact on the reinsurance sectors overall capital position” (cf. p. 12)
*Brackets indicate number of reporting reinsurers from each jurisdiction (cf. p. 48 of the Global Reinsurance Market Report 2004)
18
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
International Association of Insurance Supervisors (IAIS)International Association of Insurance Supervisors (IAIS)
A source for questions und answers
www.iaisweb.org
IAIS source for the Global Reinsurance Market Report: http://www.iaisweb.org/051215_RTG_report_final_2.pdf
19
April 2006
Dr. Sebastian Aschenbrenner-von Dahlen
IAIS – Catastrophic Risk and Insurance: Hurricane and Hydrometerological Risks
Thank you very much for your attentionThank you very much for your attention