ab university of hong kong on reinsurance 3 november 2006 on reinsurance closing remarks : what are...
TRANSCRIPT
ab
University of Hong Kong
On Reinsurance
3 November 2006
On Reinsurance
Closing Remarks :
What are the Practical Considerations?
David AlexanderHead of Life & Health, Hong Kong & MacauSwiss Reinsurance Company
Slide 2
abTopics
University of Hong Kong
On Reinsurance
3 November 2006
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Reinsurance is an integral part of the development of society
As society and the environment change so does the need for new risk management solutions
We can all influence the outcome
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ab
University of Hong Kong
On Reinsurance
3 November 2006
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ab
University of Hong Kong
On Reinsurance
3 November 2006
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Epidemics
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abHow safe do you feel?
University of Hong Kong
On Reinsurance
3 November 2006
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abInsurance Company Risk
INSURANCERISK
ASSET RISK
CREDIT RISK
OPERATIONAL RISKS
PROCESS risk…. random claims fluctuations
SYSTEMATIC risk…. secular changes in claims
EXPERIMENTAL risk…. pricing uncertainty
Insurance business is subject to significant risks …...
Many of these risk are difficult to diversify away …..…and accumulations are possibleUniversity of Hong Kong
On Reinsurance
3 November 2006
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abInsurance Risk
INSURANCERISK
PROCESS risk•One-off very large claims e.g. Windstorm, epidemic
SYSTEMATIC risk•AIDS•Liability regimes
EXPERIMENTAL risk•New products/risks•New Distribution Channels e.g. e-business
University of Hong Kong
On Reinsurance
3 November 2006
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ab
University of Hong Kong
On Reinsurance
3 November 2006University of Hong Kong
On Reinsurance
3 November 2006
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abThe 10 worst catastrophes in terms of victims 1970–2005
Source: Swiss Re, sigma No 2/20061 Dead and missing2 Property and business interruption losses, excluding life and liability insurance losses
Victims1
Insured loss (in USD m, indexed to 2005)2
Date (start) Event Country
300 000 – 14.11.1970 Storm and flood catastrophe Bangladesh
255 000 – 28.07.1976 Earthquake in Tangshan (M 7.5) China
220 000 2 068 26.12.2004 Seaquake (MW 9), tsunami Indonesia et al
138 000 3 29.04.1991 Tropical cyclone Gorky Bangladesh
73 300 – 08.10.2005 Earthquake (Mw 7.6); landslides Pakistan, India et al
66 000 – 31.05.1970 Earthquake (M 7.7), rock slides Peru
50 000 172 21.06.1990 Earthquake (M 7.7), landslides Iran
26 271 – 26.12.2003 Earthquake (M 6.5) in Bam Iran
25 000 – 16.09.1978 Earthquake (M 7.7) in Tabas Iran
25 000 – 07.12.1988 Earthquake (M 6,9) Armenia, former USSR
University of Hong Kong
On Reinsurance
3 November 2006
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abSystematic RiskSouth Africa - Mortality projections
0
500000
1000000
1500000
2000000
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
Ordinary Deaths AIDS Deaths New HIV Infections
Source: ASSA 2000; South African Society of Actuaries; Swiss Re
All regions, All races, Both sexes, All ages
University of Hong Kong
On Reinsurance
3 November 2006
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abAccumulations9/11 Industry loss estimates ($Billion)
Life$1.0 (3.1%)
Aviation Liability
$3.5 (10.8%)
Other Liability$4.0 (12.3%)
Biz Interruption
$11.0 (33.8%)
Property -WTC 1 & 2
$3.6 (11.1%) Property - Other
$6.0 (19.5%)
Aviation Hull$0.5 (1.5%)
Event Cancellation$1.0 (3.1%)
Workers Comp
$1.8 (5.8%)
Insured Losses Estimate: $32.5BSource: Insurance Information Institute
University of Hong Kong
On Reinsurance
3 November 2006
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abAccumulationsWider Implications
ReinsuranceCapacity
Currency
Volatility
University of Hong Kong
On Reinsurance
3 November 2006
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ab
University of Hong Kong
On Reinsurance
3 November 2006
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via Insurance Linked Securities
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abWe can all influence the Outcome
University of Hong Kong
On Reinsurance
3 November 2006
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Invest in risk management
Ensure you have “Contract Certainty”
Keep investing in new models for forecasting and pricing risks
Influence the market and society
• price and terms
• champion the causes you believe in
ab
University of Hong Kong
On Reinsurance
3 November 2006
On Reinsurance
The End
David AlexanderHead of Life & Health, Hong Kong & MacauSwiss Reinsurance Company