11 October 2016 Insurance

Flood risk is a growing concern in Asia

From a cat modeller’s perspective, the hottest topic in Asia at present is insurers’ concern over flood risk, Dr Iain Willis, managing director of JBA Risk Management, told EAIC Today.

“There has been a historic lack of available cat models or flood data to manage this risk in the Asia-Pacific region,” he said.
“It’s a peril that affects global portfolios and given the rapid growth of markets here in South East Asia, it’s a growing concern. It’s something that we focus on addressing.”

Given the global market conditions and the current excess capital, Willis suspects that times may remain tough for reinsurers in the region. However, he added that the multitude and size of flooding events in India, China and Sri Lanka this year could well have an impact on renewals.

“The other development we’re seeing is the emergence of new countries in South East Asia. It was for that reason that we have built a cat model for Vietnam, to help re/insurers model their exposure,” he said.

The entire Asia-Pacific territory presents opportunities for JBA Risk Management but Willis listed China, India, Thailand, Malaysia, and Indonesia as among the top opportunities at present.

Asked about the areas of greatest opportunity for re/insurers in Asia, he highlighted industrial, commercial, residential and auto.

“A lot of the portfolios we run in our cat models for Asia can be dominated by industrial and commercial lines. However, I can foresee residential and auto lines as having significant growth potential looking ahead. Driven by social mobility as much as anything else, it would reflect a maturing of the market,” he said.

In terms of property lines, and answering from a flood modeller’s perspective, he sees Vietnam, Cambodia, and Myanmar as particularly interesting and new opportunities.

He has also seen growth of new lines such as agri-risk in countries such as India and China.

“The aggregation of exposure data in Asia is definitely a challenge for re/insurers and modellers alike,” he said. “Our models are sophisticated enough to make good decisions about modelling aggregate data but this will always be a second best to having better resolution exposure information—particularly when it comes to geocoding a location.

“As we continue to produce higher resolution models and flood maps, we’ve certainly reached a point where it’s in everyone’s interest to make sure that good quality exposure data collection on assets is passed upstream so that good risk management decisions can be made from underwriting through to reinsurance.”

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