InsurTech – show me the money

ORIGINAL PUBLICATION HERE

12 months ago, a surge of interest in ‘InsurTech’ prompted a serious case of the FoMOs in many (re)insurance CEOs. This year, that Fear of Missing Out has been replaced by a fear of becoming distracted by unproven, niche technologies that are unlikely to move the dial. Oxbow Partners has helped many of its clients remain at the pragmatic end of the technological changes in the industry. In this article (first published in their Impact 25 report) they discuss the challenges and opportunities for carriers looking for material benefits from new technology.

Another astute observer of the impact of new technology is Adrian Jones, the Head of Strategy and Development at SCOR Global P&C. In this analysis with Matteo Carbone he looks at the hard numbers being filed by some of the most hyped insurtechs. They reveal that companies like Lemonade still have a long way to go before they can be sure about their business models.

InsurTech – show me the money

ORIGINAL PUBLICATION HERE

12 months ago, a surge of interest in ‘InsurTech’ prompted a serious case of the FoMOs in many (re)insurance CEOs. This year, that Fear of Missing Out has been replaced by a fear of becoming distracted by unproven, niche technologies that are unlikely to move the dial. Oxbow Partners has helped many of its clients remain at the pragmatic end of the technological changes in the industry. In this article (first published in their Impact 25 report) they discuss the challenges and opportunities for carriers looking for material benefits from new technology.

Another astute observer of the impact of new technology is Adrian Jones, the Head of Strategy and Development at SCOR Global P&C. In this analysis with Matteo Carbone he looks at the hard numbers being filed by some of the most hyped insurtechs. They reveal that companies like Lemonade still have a long way to go before they can be sure about their business models.

What institutional investors want

ORIGINAL PUBLICATION HERE

The data shows that institutional investors remain attracted to insurance-linked funds. Investors are looking for modest returns, larger allocations and better ways to educate their stakeholders about insurance-linked securities.

Clear Path Analysis spoke to 108 institutional asset managers and owners in Europe and the United States about what they look for in the asset class. 28.7% said that they were looking to increase their exposure to natural catastrophe risk over the next twelve months versus 18.5% who said that they were looking to decrease exposure. The full report covers a variety of topics and contains interviews with some key decision makers. It can be downloaded here

Cat bonds an attractive asset for EU insurers in a Solvency II world

ORIGINAL PUBLICATION HERE

Investing in catastrophe bonds is viewed as an attractive investment by some primary insurance companies, with the implementation of Solvency II meaning the assets can have certain capital benefits, depending on an insurers profile.

For a primary insurance firm which does not carry too much catastrophe risk on its balance-sheet, an investment in pure catastrophe risk can be seen as an attractive proposition, as under the Solvency II rules for capital requirements can mean that cat bonds do not attract a significant capital charge.

This isn’t true everywhere, of course. There have always been issues for German insurers that wanted to invest in catastrophe bonds and other insurance-linked securities (ILS), with the regulators taking a particularly conservative line here.

Insurance and reinsurance companies used to provide a significant portion of ILS capital, investing in assets which were deemed to help with the overall diversification of the balance-sheet, but in recent years that trend has slowed.

Insurance Linked

Perspectives interview with Eugene Gurenko – The World Bank Group

Insurance LinkedORIGINAL PUBLICATION HERE

Eugene Gurenko is a Lead Insurance Specialist at the joint World Bank/IFC Finance and Markets Global Practice. He has worked at the World Bank Group since 1998 where he has helped to develop catastrophe risk management solutions for the World Bank client countries,including the Turkish Catastrophe Insurance Pool – currently one of the largest earthquake insurers in the world.

What are some of the reasons behind the significant protection gap (the difference between economic and insured catastrophe losses) in emerging markets?

Insurance Linked

The case for ILS as a responsible investment

Insurance LinkedORIGINAL PUBLICATION HERE

Responsible investment strategies have experienced rapid growth in recent years. One report estimates that $6.6 trillion (18%) of US domiciled assets are engaged in responsible investment practices. Robert Howie and Alex Bernhardt from Mercer believe that investors with a mandate for responsible investment should be looking closely at insurance linked securities.

Screen Shot 2016-01-27 at 2.38.41 PMAlthough many of us think of insurance as a necessary evil, it nonetheless serves a clear and important social purpose: It supports sustainable economic growth and helps prevent hardship. In the absence of insurance, certain risky activities could not reliably be undertaken by individuals (for example, buying a home) or businesses (for example, many forms of capital investment). And where uninsured losses do occur, public entities (and therefore citizens/ taxpayers) are often left to foot the bill. By virtue of this dynamic, a lack of insurance penetration is a problem for society, which is why the widening gap between economic and insured catastrophe losses worldwide is of concern. Long-term trends such as climate change and rapid coastal urbanization only stand to exacerbate the issue.

This article revisits the case for investment in insurance-linked securities (ILS) and explores whether ILS can be part of a responsible investment (RI) strategy.

Insurance Linked

What happened to all the hurricanes?

Insurance LinkedORIGINAL PUBLICATION HERE

In just two years (2004-2005) the United States experienced seven major hurricanes. In the nine years since then, not one major hurricane has made landfall in the US – the longest gap since records began. In an upcoming paper, NASA’s Dr Tim Hall has calculated that this kind of hurricane ‘drought’ should only happen every 177 years. Has something changed or has the US just been extraordinarily lucky?

With the passing of the quiet 2014 season, it’s now nine years without a major hurricane landfall on the US. The last category three plus strike was Hurricane Wilma in 2005. This length of “drought” is unprecedented in the historic record at least back to 1851. Exactly how rare is such a string of years? What can we conclude from it? And how long on average do we wait to till the next major landfall?