Baku, June 20, 2013 Europa Re Value Proposition - PowerPoint Presentation

Slide1

Baku, June 20, 2013

Europa Re Value Proposition

A brief outline

1

Riccardo Ciccozzi

Accreditation & Representation Specialist

AgendaContext

SEE Exposure to Natural Disasters

Natural Disasters’ impact in SEECatastrophe Insurance MarketsProject

Vision and Market Value prepositionKey services

Main Steps

Challenges ahead

2

Major Natural Disasters in South East Europe3

Source

:

Mitigating

the Adverse Financial Effects of Natural Hazards on the Economies of South Eastern Europe

A

Study of Disaster Risk Financing OptionsSouth Eastern Europe Disaster Risk Mitigation and Adaptation Programme - Eugene N. Gurenko Wael Zakout

The World Bank, Sustainable Development Department Europe and Central Asia Region and UN/ISDR secretariat Europe February 2008

SEE High Exposure to Natural DisastersSouth East Europe (SEE) is

highly vulnerable to natural disasters.

In the past thirty years, economic losses in excess of $70 billion were reported.A major earthquake in

Turkey in 1999 caused more than 17,000 deaths

and economic

damages estimated at 5% of

GDP.Floods in Central and South East Europe alone in 2002 and 2005 caused economic losses of $15 billion and $2.5 billion, respectively, leaving over 25,000 people homeless.In ten of the twenty-eight countries in the region, up to 4 million people are exposed to severe natural catastrophic perils, while up to 32 million (or 7% of the region’s population) can be affected by natural disasters.

Climate Change is expected to worsen the region’s exposure

Due

to the growing volatility of climate, smaller but more frequent events are also becoming a major reason for concern.

4

Disaster Risk Reduction & Disaster Risk FinancingDisaster Risk Financing reduces the opportunity cost of disasters

(cost of securing funds to sustain a natural disaster)

5

Disaster Risk Reduction reduces the

expected disaster losses

Catastrophe Insurance Markets – Development Prospects The growth

potential of Cat Property Markets in SEE is therefore very high. For example:Turkey Market

Turkish Catastrophe Insurance Pool (TCIP) established in 1999Turkey cat insurance penetration at 25% of insurable stockRomania MarketRomania Natural Disaster Insurance Pool (

PAID) established in 2008

Romania cat

insurance penetration at

60% of insurable stockSuccess can be achieved through combined efforts of the public and private sectors:Support by adequate government policyRegulatory reformConsumers’ education

Reliable claims performance

Commercial connection between flood / quake coverage and mortgage loans

This was achieved in Central Europe:

Poland – Cat Insurance Penetration at 55%

Slovakia -

Cat Insurance Penetration at

58%

Czech Republic -

Cat Insurance Penetration at

over 60%

Hungary -

Cat Insurance Penetration at over

70

%

6

Catastrophe Property Risk Insurance Pools – ExamplesRegional (sovereign) catastrophe risk insurance pools

Caribbean Catastrophe Risk Insurance Facility

Pacific Disaster Risk Insurance Program (under development) National property catastrophe risk insurance pools Turkish Catastrophe Insurance Pool California Earthquake Authority

Taiwan Residential Earthquake Insurance Pool

Algeria

Catastrophe Risk Insurance Pool

Romanian Natural Disaster Insurance Pool (PAID) Consorcio de Compensación de Seguros (Spain)CCR (France)

Etc.

7

A variety of tools and approaches are possible

Issue Cat Bonds?

Mandatory Insurance?

Regional Spread or National Focus?

8

South East Europe (SEE) is highly vulnerable to natural disasters

Climate Change is expected to worsen the region’s exposure

Adverse impacts on governments’

budgets

Socio

-economic implications on

households

Adverse

economic effects on business

Very Low Cat Insurance Penetration

Lack of Risk Awareness

Market Growth Potential

Flood

Heat Waves

Drought

Quake

Market Infrastructures to develop Catastrophe and Weather Risk Insurance for Households, SMEs and Farmers

Europa Re - Business Model – Vision & Mission9

A Swiss-based company owned by countries of Southeast Europe (SEE

)Supported by the World Bank, EU, UNISDR, SECO and GEFProviding innovative technology-driven solutions to SEE insurers writing catastrophe and weather risk insurance products

Vision - Increase the level of catastrophe insurance penetration amongst

households, small

and medium

enterprises (SMEs) and farmers in the SEE regionEducating consumersImproving and standardize credit quality of insurance productsEnabling insurers to sell weather and catastrophe risk insuranceHelping governments and insurance regulatorsMission

Europa Re Project

Key Services - Risk ManagementMarket Issue

: lack of high-resolution and reliable catastrophe (cat) models for SEE cat exposuresERe Solution

: provide local insurers with state-of-the-art probabilistic cat modelling tools based on the latest technology offered by Market LeadersMain Benefits: High-resolution Models available at a much lower costERe’s Cat Models’ technology is

underpinned by:

AIR’s

global research in catastrophe risk

modellingCountry specific risk dataUnique business applicationsERe’s

Risk

m

anagement

systems

allow insurers to

accurately evaluate

:

Potential

losses resulting from catastrophe insured risks at any point in time;

Net

retention capacity relative to available solvency.

10

11

Real-time monitoring of disaster events and option to receive notifications

Reports on disaster risk assessment of their properties/businessesIdentification of major structural vulnerabilities of their propertiesAdvice on possible risk reduction techniquesReferrals to insurance companies accredited under Europa Re programCommunity catastrophe risk assessment and management service

Key Services - CATMonitor

Key Services - What will Europa Re do for ConsumersGovernment

As result:

Consumers’ profit and assets are better protectedHigher incentive to produceOutcomeIncreased productionIncreased incomeHigher contribution to economy

Insurance companies

Direct subsidies

Insurance premium subsidies

Basic Insurance protection

Specialized Insurance protection

Europa Re

Expertise on improving the subsidy scheme

New user friendly and affordable products

Know how

Awareness

Education

Development of distribution channels

New Parametric Insurance Products

Improved market mechanism

Consumers

12

Key Services - What can be expected from ERe products

13

fast and simplified loss settlements

Remote Sensing & Cat Modelling Technologies

Europa Re Parametric products

1. Precipitation

2. Temperature

Main principle of parametric weather insurance:

Coverage in case of unusual behavior of weather

14

Example: Drought insurance

15

Pre-event

Post-Event

Event timeline

Geocoding at the time of underwriting

Pre-event Imagery

Exposure data

Protocols

Claims submission

Assignment

Evaluation in-house or send adjustors to review

Phase 3 Claims settled

Phase1

48-72 hrs

Imagery data collection

Remote Damage Assessment

Phase1 Claims settled

Phase 2

1-2 weeks

Effectively target adjustors and claims resources

In-field damage assessment

Phase 2 Claims settled

Phase 3

within weeks

Claims Adjusting and Management

Financial Management

Before/After image comparison

Work Management

Documents

I

Correspondence

I

I

Contacts

I

Litigation

Subrogation

Salvage

A new perspective for claims

Event

Event Monitoring

& immediate notification

Main Sequencing Steps17

Challenges aheadGovernment Involvement:

To educate, regulate and incentivize

Consumers’ resistance:Lack of risk awareness / low trust in private insuranceInsurance Industry Resistance:

What’s in it for me?

But,

Engage & Innovate

Lessons from the Macedonian farmers18

New Legislation and regulations shall be issued in SEE to foster private cat insurance

Promotional activities shall target directly consumers in the region

Local

Insurers to enter into formal cooperation

with ERe

Thank you for your attention!

Contact details:info@europa-re.com

www.europa-re.com19