Boosting Financial Resilence to Natural Disasters in Central Asia

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Cities across Central Asia experienced catastrophic seismic shocks throughout the 20th century. For example, Tashkent – the most populated city in Central Asia today – was razed to the ground by a 7.5 magnitude earthquake in 1966, with over 300,000 people reportedly losing their homes. Turkmenistan’s capital city of Ashgabat was severely impacted by a 7.3 quake in 1948, with thousands of deaths reported. Dushanbe, the capital of Tajikistan, and Almaty, Kazakhstan’s largest city, also suffered major seismic events in 1907 and 1911, respectively.

Russian State Reinsurance Company is accused by Russian parliamentarians of corruption in reinsuring their risks through brokers

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The Russian State Reinsurance Company (JSC “RNPK”) was established in 2016, during a period of increasing anti-Russian sanctions, in order to insure companies against the risk of sanctions: the purpose of the company was made very clear at the time.

However, providing such insurance to Russian companies has become increasingly difficult, primarily because of poor management. Out of 70 full-time staff members of the RNPK, there are, allegedly, only a total of about 5 professional reinsurers who are able to assess the risks competently, and to pick out the appropriate reinsurance company for the client.

Romania seeks World Bank Catastrophe Deferred Drawdown Option (Cat DDO)

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A project is now underway that may see the country of Romania as the next in line to benefit from a Catastrophe Deferred Drawdown Option (Cat DDO) instrument from the World Bank, as the government of the country seeks to enhance its disaster risk financing support.

The Catastrophe Deferred Drawdown Option (Cat DDO) is an interesting disaster risk financing product, especially as it is contingent on the occurrence of catastrophes and designed to be disbursed almost immediately after disaster events occur.

Designed and provided by the World Bank, the Cat DDO is similar in terms of the kind of protection it offers to a catastrophe bond, in that it promises capital liquidity right when disasters happen.

Asia: Region’s ILS mart to grow as protection gap widens

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Asia is poised to be the next frontier for the growth of insurance linked securities (ILS) as ILS funds continue to diversify their investment portfolios, according to Ms Jacqueline Loh, deputy managing director of MAS at the Artemis ILS Asia 2018 Conference on 12 July.

She said that although at first glance, the economics of ILS in Asia appear to be challenging with the continent still a developing market with low insurance penetration, it is likely that ILS will achieve a breakthrough in the coming years as the protection gap in Asia widens.

Nephila Capital adds 11% to reach $12.2bn of ILS assets managed

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Nephila Capital, the largest investment manager of catastrophe and weather insurance-linked securities (ILS), has increased its total assets under management by roughly 11% so far this year, reaching $12.2 billion of ILS AuM as of the beginning of July 2018.

ILS fund manager assets have been steadily on the rise since the last part of 2017, with the market as a whole adding roughly $20 billion over that period.

Once ILS funds and their investors gained sufficient clarity over the impacts of the major hurricanes and other catastrophe events, they put their plans into action to replenish capital to support trading forwards for their reinsurance and retrocession clients and sought to take advantage of any pricing opportunities that emerged.

Singapore to introduce protected cells for collateralised reinsurance

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Singapore has ambitions to become an insurance-linked securities (ILS) domicile for the Asian region or global issuers looking for an alternative, and with a special purpose reinsurance vehicle (SPRV) already regulated for, the addition of protected cell company (PCC) regulation is a natural next step.

Speaking at Artemis’ third annual insurance-linked securities (ILS) conference in Singapore last week, ILS Asia 2018, Jacqueline Loh, a Deputy Managing Director of the Monetary Authority of Singapore (MAS), explained that Singapore’s ambitions are to offer a full suite of ILS structuring options to the market, in order to foster market expansion and greater ILS penetration into the Asian region.

Price inadequacy of longer-tailed lines mean ILS could take a closer look

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The reinsurance market is expected to take a much closer look at the adequacy of pricing and profitability for many longer-tailed lines of specialty and casualty business, especially as reinsurers have generally been unable to command the payback they may once have been used to, following the catastrophes of 2017.

This could make it an attractive time for the insurance-linked securities (ILS) market to take another look at longer-tailed risks, as there may be an opportunity for the efficiency of ILS capital and benefits from diversification to be put to work in some cases, helping ILS funds to benefit from areas of the market that are expected to see ongoing rate increases.

Reinsurance firms had in the main been expecting much larger rate increases at the renewals so far this year, after taking significant losses in 2017.

RMS expands Asia Pacific model coverage, enhances U.S. hurricane & specialty

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Catastrophe risk modelling specialists RMS have launched version 18 of their risk model suite, brining with it a raft of additions and expansions, particularly in the Asia Pacific region where new perils have been added including a focus on flood risks.

V18 is the latest incarnation of RMS’ catastrophe risk modelling and management software and represents the biggest update to the risk model suite for some time, as it continues to provide a platform that assists insurance and reinsurance capital providers in taking underwriting decisions and managing their risks.

Among the updates there is a distinct focus on improving risk model coverage for Asia Pacific, with new perils covered and a focus on flood risks, which the company notes is a leading cause of insured loss in countries like India.