Cats to stabilise renewals: ACR
Recent catastrophe events in Asia are likely to stabilise rates in the upcoming renewals and make any significant rate reductions unlikely, Soeren Soltysiak, chief underwriting officer, treaty, Asia Capital Reinsurance Group, told SIRC Today.
Typhoon Jebi made landfall over Japan in September 2018 at category 5 force, causing insured losses estimated at between $5 and $7 billion.
Japan has also been hit by Typhoon Trami as well as by two earthquakes and very heavy rainfall.
Industry insured losses from Typhoon Mangkhut in mainland China, Hong Kong, and Macau are expected at between $1 billion and $2 billion, according to estimates.
“While none of these has been a capital event for the industry, they have once again proved the importance for insurers of properly understanding their retained losses and exposures in certain regions,” Soltysiak said.
“A series of small to mid-sized losses can often have a greater impact on insurers than one significant catastrophe loss.
“In terms of rate changes, the effect on businesses will differ account by account depending on the magnitude of the events,” he said.
He suggested that the cat events are unlikely to have a significant impact outside the loss-affected areas and that rates in general remain very competitive across all classes of business.
On a macro level, the impact of these cat events continues to highlight the protection gap, especially in emerging markets, Soltysiak said.
“We are already seeing many governments exploring a variety of coverage solutions to close this gap. As an industry, the re/insurance body continues to stand ready to support with capacity or expertise to help deal with the issue.”
Insurers need to lower distribution costs, processing expenses and claims management fees to take advantage of the opportunity, Soltysiak suggested.
“These costs will have to be managed down to almost zero,” he said.
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