Insurance 2030 – The impact of AI on the future of insurance

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The industry is on the verge of a seismic, tech-driven shift. A focus on four areas can position carriers to embrace this change.

Welcome to the future of insurance, as seen through the eyes of Scott, a customer in the year 2030. His digital personal assistant orders him an autonomous vehicle for a meeting across town. Upon hopping into the arriving car, Scott decides he wants to drive today and moves the car into “active” mode. Scott’s personal assistant maps out a potential route and shares it with his mobility insurer, which immediately responds with an alternate route that has a much lower likelihood of accidents and auto damage as well as the calculated adjustment to his monthly premium. Scott’s assistant notifies him that his mobility insurance premium will increase by 4 to 8 percent based on the route he selects and the volume and distribution of other cars on the road. It also alerts him that his life insurance policy, which is now priced on a “pay-as-you-live” basis, will increase by 2 percent for this quarter. The additional amounts are automatically debited from his bank account.

Parametric disaster insurance facility for ASEAN to get Japanese funding

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Japan is set to back and help fund the launch of the Southeast Asia Disaster Risk Insurance Facility, a parametric disaster insurance pool that will be established to serve ASEAN nations including Laos, Myanmar and Cambodia to begin with.

The Southeast Asia Disaster Risk Insurance Facility (SEADRIF) is set for an official launch in May, at an Asian Development Bank board meeting, according to a report in the Nikkei.

ILS response to disasters could drive 20% cat bond growth: John Seo, Fermat Capital

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Insurance-linked securities (ILS) demonstrated the value of its protection offering last year and the capital markets are expected to respond to the need for additional capacity to help close the expanding disaster gap in 2018, which could result in cat bond market growth of 20%, according to John Seo of Fermat Capital Management.

The catastrophe loss experience witnessed in the second-half of 2017 highlighted the lack of insurance penetration in both emerging and more developed parts of the world, and also the “gross under-preparedness” of the re/insurance sector to meet the cost of insured disasters.

Record Q1 shows investors aware of “inherent value” of ILS: Schultz, Aon Securities

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The record level of catastrophe bond issuance witnessed in the first-quarter of 2018, on the back of the huge level of 2017 catastrophe losses, shows how investors are aware of the inherent value of ILS and are increasingly comfortable with the risks, according to Paul Schultz, Chief Executive Officer (CEO) of Aon Securities.

Aon Securities, the investment banking unit of reinsurance broker Aon Benfield, has released its Q1 2018 ILS market update, which notes record catastrophe bond issuance in the period of $3.58 billion, across ten transactions.

ILS breaks records in Q1, investors “reloaded & ready” for June 1st: WTWS

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Insurance-linked securities (ILS) activity was up significantly year-on-year in the first-quarter of 2018, as catastrophe bond issues accelerated and investor appetite remained strong, following the impacts of major catastrophes in 2017. This puts the market in a strong position for the mid-year renewals, as it is now reloaded and ready to go, according to Willis Towers Watson Securities.

In the firms latest quarter ILS and catastrophe bond market report, Willis Towers Watson Securities (WTWS) notes that, “Far from recoiling from loss events in 2017, ILS investors are reloaded and ready for the 1 June 2018 Florida renewals.”

Can Central Asia protect itself from disasters?

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By Stanislav Kim, Programme Specialist of UNDP Recovery, Early Warning Systems and Response, Istanbul Regional Hub

Most people who live in Central Asia are too young to remember the devastating earthquakes from the past.

Although all Central Asian countries are characterized by high seismic risk, the region has seen few destructive earthquakes in recent decades.

But in 1966, Tashkent, Uzbekistan’s capital, was leveled by a 7.5 magnitude earthquake. Ashgabat, the capital of Turkmenistan, was partially destroyed in 1948 with up to 176,000 deaths reported.

CATCo investment fee income up 84% for Markel in first-quarter

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Financial services, insurance and reinsurance giant Markel Corporation has reported a significant 84% year-on-year jump in investment management fees generated by the reinsurance and retrocession linked ILS investment activities of its specialist manager Markel CATCo Investment Management.

Following a decline in investment management fees earned from Markel CATCo’s ILS and reinsurance linked fund management activities, after the impact of the major losses in 2017, the revenue earned increased significantly in Q1 2018, as major catastrophe activity dropped back to more typical levels.

ILS and closing the insurance gap

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How can ILS help to close the insurance gap, asks Clive O’Connell, partner, head of insurance and reinsurance at McCarthy Denning.

ILS is complementary to insurance and not its rival. ILS provides solvency protection to insurers and reinsurers, giving peace of mind to regulators and policyholders. ILS can now step further and, in helping to close the insurance gap, can help develop insurance markets.

Last year’s hurricanes have increased investment funds available to ILS. This money needs to be deployed in a diverse risk pool. At the same time governments are becoming aware of how ILS can help deal with the impact of natural catastrophes in areas where insurance penetration is very low. Instead of relying on growth of the insurance sector from the bottom up, a top down approach, in which governments purchase ILS products to guard against the economic and social disturbances of natural disasters, is taking hold.

ADB, Partners Review Financial Preparedness for Disaster Response in Pakistan

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ISLAMABAD, PAKISTAN (25 April 2018) — The Asian Development Bank (ADB), the Department for International Development (DFID) of the United Kingdom, and German development cooperation through KfW joined the Government of Pakistan and other partners today to discuss strategies for disaster risk financing in Pakistan.

The 2-day workshop in Islamabad, titled Disaster Risk Financing in Pakistan: Enhancing Synergies and Coordination of Initiatives, reviewed the enabling environment, and disaster financing instruments currently in place in the country and opportunities for enhanced financial preparedness. The senior government officials, donors, and local and international experts who attended the event reiterated their commitment to continue supporting efforts to strengthen the country’s disaster risk financing capacity.