Asia needs to tackle new risks: Swiss Re
New risks such as international trade and cyber are emerging in Asia and the re/insurance industry needs to find new approaches to understand and anticipate such risks, Victor Kuk, head of P&C client markets for south-east Asia, India, Korea, Hong Kong and Taiwan at Swiss Re, told SIRC Today.
Kuk believes that a close collaboration between multiple stakeholders is needed in order to address these new risks.
The re/insurance industry is still building up its knowledge in cyber risk and Swiss Re is currently working in order to help foster greater cyber resilience, helping governments and business to mitigate the risk where possible and protect the livelihoods of people, Kuk noted.
The need for support in managing cyber risks and building cyber resilience is especially pronounced among small and medium-sized enterprises (SMEs), which account for more than 90 percent of all businesses in Asia-Pacific and employ between 60 and 80 percent of the workforce.
Asia is also facing increasing losses from natural catastrophes. Global reported economic losses from natural disasters climbed by 151 percent in the last 20 years, according to the United Nations International Strategy for Disaster Reduction (UNISDR).
Three Asian nations are among the top five most vulnerable to natural disasters, namely China, Japan and India. In 2017, economic losses due to natural catastrophes in Asia-Pacific amounted to $31 billion, of which 84 percent were uninsured.
“The industry must seek to address the key drivers that help create this gap, such as lack of awareness, access, affordability and understanding, as well as product design elements,” Kuk said.
“We expect natural catastrophes to happen more frequently, and with urban development in the region, these forces of nature will continue to inflict devastation on our societies with greater impact in the future,” he added.
“Parametric solutions are an excellent example that uses technology, data and risk knowledge to provide coverage where traditional indemnity-based insurance are found inadequate.
“Triggering automated claims payments based on a pre-defined set of indices, parametric solutions can provide earthquake or typhoon coverage, helping people to recover quickly and get back on their feet.”
Parametric solutions can provide cover for households and businesses, making previously uninsurable risks insurable.
“There is tremendous growth potential in Asia, particularly with low penetration rates in many of the emerging markets.
“We see opportunities for insurance to step up and play an active role in understanding and managing the risks,” Kuk said.
