Insurance Companies
Management Plans for
Natural Hazards
September, 2013
1
Nat Cat Risk Map
Turkey Earthquake Risk Map
2
Some Serious Events in 2011
•
•
•
•
New Zeland E/Q, Japan E/Q, Turkey E/Q
ABD , Europe Snow Storm
England , ABD Taphoon, Tornado
Irene Hurricane
New Zealand
Earthquake
~ $13.5B
Jan
Joplin Tornado
Outbreak ~
$6.5B
Japan Earthquake
and Tsunami
~ $23.5B
Feb
Winter storms hit
Midwest & Northeast
~ $1.0B
Mar
S&P
downgrades US
debt
Apr
May
Birmingham Tornado
Outbreak
~ $7.3B
Jun
Jul
TX Wildfires
~ $.5B
Aug
Hurricane Irene
~ $4.3B
Thailand Floods
~ $10B
Sep
10yr Treasury yield
hits historical low
(1.72%)
Oct
Nov
Snowstorm
hits northeast
~ $.6B
S&P 500 down
19% from 2011
peak
A.M. Best places 6
Euro groups
"under review"
Dec
S&P warns of
downgrades for
15 Euro nations
3
Largest Natural Catastrophes 1970-2011
4
Insured Catastrophe Losses 1970- 2012
5
One of the Biggest Natural Hazards in 2011
in Thailand Flood 12 Mia USD
The Biggest Natural Hazards within last 20 years is Sand
Hurricane in America more than 25 Mia USD in October 2012
4
6
Natural Hazards Event Claims in Turkey
Due to Global Warming (Unexpected Flash Flood & Wind Storms) also because of Geological
conditions of Turkey Earthquake events on top of this insufficient risk conditions has created
heavy effect on insurance companies in last 18 Months.
İstanbul Storm (2012 April)
Samsun Flood (2011 July)
Ordu Flood (2011 August)
Egean Flood (2011 January)
Van Earthquake (2011 October)
Antalya Flood (2012 January)
Antalya Flood (2011 October)
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Catastrophic Events in 2012
Over 300 catastrophic events
occurred in 2012 168 were
natural catastrophes, while the
remaining 150 events were manmade disasters
Total economic losses estimated
at about USD 186 billion
2
8
Catastrophic Events in 2012
At least nine events triggered
losses of USD 1 billion or more;
Hurricane Sandy was the most
expensive at USD 35 billion.
%42 of Total Damage in Asia
2
3
9
List of Major Losses in 2012 according to
Loss Category
3
2
5
10
2012 Reinsurance Impacts
Reinsurer Capital (USD Billions)
-3%
10%
17%
-17%
18%
•
•
Reinsurer capital has continued to increase
throughout the first 3 quarters of 2012 to a new
peak level
Supply continues exceed demand in most global
regions
Insurer Capital
12%
•
•
5
3
2
8
Insurer capital increased 9 percent from year end
2011 to Q3 2012, back in line with historical
averages for the industry.
Reinsurance demand continues to be flat to down
slightly in peak zones as capital increases and
insurers continue to retain more risk.
1%
9%
34%
-29%
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Important Catastrophe Losses
8
5
3
2
Source: Munich Re
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Total Cat Protection in Turkish Insurance Sector
since 2010
Total Cat Protection in Turkish Insurance Sector
6.47 Milyar Euro
Turkish Cat Protection Cots increase by %15
8
5
3
2
10
Source: Munich Re
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On the Other Hand Climate Change Is Happening and
Natural Hazards on Increasing Trends

Potential increased frequency and
severity of storms

Rising sea levels

Potential increased frequency and
severity of drought

Natural resources stresses

Increased severe weather events
•Flood
•Hurricane winds
•Ice Storms
•Fires …

Earthqukaes
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Environmental Impacts
Drought
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What is the Role of Insurance in Adaptation to and
Mitigation of Climate Change Risk ?

History / Demonstrated Record of reducing risks
-

Exploration into emerging markets
Reduction of Fire Risk / Improvement of Existing Building Stock
Improvements to Worker Safety
Improvements to Vehicle / Driver Safety
Risk Mitigation in Deployment of New Technologies
Policy makers should engage insurance industry expertise and capital to most
efficiently and effectively adapt to and mitigate risks of climate change and
natural hazards
- After all … insurers are in the business of risk …
Climate Change Risks and Opportunities
Risks:
 Failure to climate proof creates difficulties in securing investment and/or insurance cover
 Potential liabilities if climate change is not factored into long term decisions about the
future
Possible impacts:
 Insurance Policies: Check Insurers stance on undefended flood risks and impact on
premiums
 Future Developments: improved specification that takes account of future climate is likely
to be cost effective in most cases
Opportunities/Controls/Mitigation
 Evidence of climate proofing enhances reputation with all stakeholders, provides security
for investments and an opportunity to reduced insurance premiums
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The Role of Insurance Sector to Natural Hazards
ADAPTATION
Risk
Assessment
MITIGATION
Claims
Management
Forward Looking
multi dimensional
models
Interaction
with
Policymakers
Risk Transferred and Coverage
Awareness Raising
Insurance Product / Reinsurance
Coverage
Communication, risk and
hazard map, pricing for risk
Arrangement
Emergency Plan,
Early Warning etc.
Risk Mitigation &
Prevention
Insurance Policy
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1
Insurance Companies Natural Hazards
Management
Before Claim

Increasing the Risk Awarness of the Risk

Maping of the Risks and Classfing and Pricing Models

Risk Assesment / Selection

Following the Technical Rules / Regulations / Precautions


Appropriate Scope of Wording and Clauses in accordance with the tariff and
regulation in force

Monitor the Catasrophic Accumulation coming from the policies in the portfolio
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Insurance Companies Natural Hazards
Management
Before Claim

Focused risk-management efforts include use of geographic information systems to
better understand and pinpoint risks, land-use planning, flood control programmes,
mitigation along coastlines, cloud seeding to divert hail storms, tightened zoning,
improved weather forecasting and storm warning systems, and public spending on
disaster preparedness and recovery

To buy eough Natural Catastroping Reinsurance Protection in paralel with the existing
company cumulative sum insured

To Establish one additional data storage area in a different place far away the main
buiilding where can not be impacted afetr teh same event

Creating Common Data Bank within the Market wshowing all existing insured details
( such a Tramer for motor business )
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Insurance Can Be Applied to Facilitate Mitigation &
Adaptation to Climate Change Risk
Before Claim

Insurance focuses on risks to private assets

Insurance is the ultimate economic shock absorber

Insurers have also developed disaster preparedness and recovery plans, and
participated in the formulation of building codes to make buildings more
disaster resistant

Insurers are creating products today to facilitate adaptation and mitigation to
climate change risk
20
Insurance Companies Natural Hazards
Management
After Claim

Business Continuty Plan
1) Personal Safety
* If hit by an natural hazards within office hours
* If hit by an Natural Hazards after Office Hours
2)Fırst Aid and Building Safety
3) Partners and After Event Coomunication
4) Copamny – Staff First Commnunication After the Event
5) Situation Analysis and BCP Invacation
6) After event Actions – Coordination - Commnunication
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Insurance Companies Natural Hazards
Management
After Claim

Prepare The Business Continuty plan and Pre Agrement with the Third Parties
 Claim Adjusters
 Car Reapirer
 Restoration Companies
 Suppliers ( Spare Parts ect )
 Lawyers
 Ect.

Rough / Quick Estimation of the Size of the Natural Hazard

Decide and Establish Immediate Actions

Organize the Possible Risk Minimaze Actions
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Insurance Companies Natural Hazards
Management
After Claim

Communication with Reinsurers
 Claims Notification
 Claim Handling
 Advanced Payment ect

Manage the Cash Flow
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