RAJ CAIRNS REPORT


Leave a comment

America sees the benefit of a multi-state catastrophic risk pools in reducing Insurance Polls but not the Minister of Local Government David Crisafulli————-A modeling platform from Kinetic Analysis Corp. enabled researchers to drill deeply into large volumes of storm-related data spanning nine states and 140 years. Study finds that multi-state catastrophic risk pools offer significant benefits in major tropical events.


 

 

 

 

 

 

A modeling platform from Kinetic Analysis Corp. enabled researchers to drill deeply into large volumes of storm-related data spanning nine states and 140 years. Study finds that multi-state catastrophic risk pools offer significant benefits in major tropical events.

In the wake of the multi-state destruction wrought by the one-two punch of Superstorm Sandy and the nor’easter that followed, a new study suggests that geographically diverse, multi-state catastrophic risk pools provide clear financial benefits without creating subsidies between low and high risk areas. Sponsored by the Florida Catastrophic Storm Risk Management Center at Florida State University (FSU), the study was conducted utilizing the science-based risk modeling platform from Kinetic Analysis Corp., a specialist in multi-model impact forecasting and risk assessment for catastrophic events.

 

 

 

 

 

Disasters | Homeland Security News Wire.


Leave a comment

Minister of Local Government David CrIsafulli must explain why he does not support a National Insurance Pool, when it would reduce premiums by 70%————MP’s claims rubbished | Townsville Bulletin————–Mr Jones was supported by Mundingburra MP and Local Government Minister David Crisafulli at the luncheon who said he “agreed entirely with Ewen”.


 

 

 

 

CAIRNS MP Warren Entsch has reacted angrily to Townsville colleague Ewen Jones telling a packed business luncheon Mr Entsch wanted to nationalise the insurance industry.

Mr Entsch said Mr Jones had never spoken to him about it and the description was “bulls …”.

Mr Entsch also warned that if the market was left to prevail, as Mr Jones seemed to want, there would be no insurance north of the Tropic of Capricorn.

Mr Jones told a Property Council lunch in Townsville last Friday he had a “different perspective” to his LNP colleague at Cairns Warren Entsch.

“Warren wants the whole thing nationalised and wants premiums lowered by government subsidy or something like that,’’ Mr Jones said.

“I’m against that. I have never seen anything the ­Government has taken over that has ended up costing people less.”

Mr Jones was supported by Mundingburra MP and Local Government Minister David Crisafulli at the luncheon who said he “agreed entirely with Ewen”.

 

 

Mr Jones was supported by Mundingburra MP and Local Government Minister David Crisafulli at the luncheon who said he “agreed entirely with Ewen”

 

 

 

 

 

MP’s claims rubbished | Townsville Bulletin.


Leave a comment

Insurance Premiums could come down 70 % with National Pool——-Turkey has a National Pool like New Zealand———–Insurance pool: Collective pool of risk from multiple insurance companies. Pooling facilitates the development of insurance markets by spreading risk across insurers who would otherwise lack financial capacity to participate in the market. It enables insurers to provide affordable coverage for high-risk events——————-The TCIP enables around 30 insurers to sell stand-alone earthquake insurance policies, developing their capacity in catastrophe insurance and significantly increasing the availability and affordability of earthquake insurance in Turkey.


 

 

 

 

Lessons Learned

1. The TCIP public-private partnership has facilitated

the growth of the catastrophe insurance market in

Turkey. The number of earthquake policies sold

increased six times from 600,000 in 1999 (the year

before the TCIP’s establishment) to 3.5 million in 2010.

Highlights

 Turkey is regularly affected by natural disasters,

especially earthquakes and floods.

 Impacts of such disasters and low levels of property

insurance coverage led the government to support the

establishment of a widespread and effective earthquake

property insurance system.

 The World Bank helped the Turkish Government

develop the Turkish Catastrophe Insurance Pool (TCIP)

to limit the financial burden earthquakes place on the

government budget, focus government relief funds on

low income residents, and access international

reinsurance capacity in a cost effective manner. http://www.gfdrr.org/drfi Updated January 2011

GFDRR is able to help developing countries reduce their vulnerability to natural disasters and adapt to climate change, thanks to the

continued support of its partners: ACP Secretariat, Australia, Bangladesh, Belgium, Brazil, Canada, Colombia, China, Denmark, Egypt,

European Union, Finland, France, Germany, Haiti, India, Ireland, Italy, Japan, Luxembourg, Malawi, Mexico, The Netherlands, New

Zealand, Norway, Portugal, Saudi Arabia, Senegal, Spain, South Africa, South Korea, Sweden, Switzerland, Turkey, United Kingdom,

United States, Vietnam, Yemen, IFRC, UNDP, UN/International Strategy for Disaster Reduction, and The World Bank.

Annual

premium

Around US$62/homeowner on average,

depending on construction type and

location.

Deductible 2%

Covered

perils

Earthquakes, fires following earthquakes

Covered

buildings

Residential buildings that fall within

municipal boundaries

Maximum

coverage

Approximately US$92,000 per policy (as

of Jan. 1, 2009)

Policy

distribution

Through around 30 insurance companies

Main Terms and Conditions: Compulsory

Earthquake Insurance Scheme

The TCIP enables around 30 insurers to sell stand-alone

earthquake insurance policies, developing their

capacity in catastrophe insurance and significantly

increasing the availability and affordability of

earthquake insurance in Turkey.

2. Although the TCIP has been a success, it will take

time to achieve deeper market penetration in Turkey.

Today, the TCIP provides insurance coverage to 23% of

dwellings country-wide and about 40% in particularly

disaster prone areas. There has been the expectation

that the government will pay for damages to

households regardless of the insurance program. A

program like TCIP relies on a strong communication

strategy to ensure that residents are aware of

earthquake risk, mandatory insurance laws, and the

program’s excellent claim-paying record. The TCIP has

invested heavily in public education and marketing,

initiating many projects to increase public awareness

and understanding of its presence.

3. The provision of property catastrophe insurance

requires both technical capacity and financial

capacity. Catastrophe insurance requires highly

technical catastrophe risk modeling techniques to price

premiums that accurately reflect the underlying risk.

Ensuring financial viability also requires a balance

between increasing claims-paying capacity and the

cost of financing this capacity. At its inception, TCIP

had sufficient claims-paying to withstand a 1-in-100-

year event. Since then, it has increased its reserves and

strengthened its reinsurance capacity to sustain an

earthquake with a return period of 350 years.

Glossary

Deductible: The dollar amount or percentage of an

insured loss that the policyholder must cover before

any claims are paid by the insurer.

Insurance pool: Collective pool of risk from multiple

insurance companies. Pooling facilitates the

development of insurance markets by spreading risk

across insurers who would otherwise lack financial

capacity to participate in the market. It enables

insurers to provide affordable coverage for high-risk

events.

Reinsurance: Purchase of insurance by an insurer from

another specialty insurance company (the reinsurer)

for the purpose of spreading risk and reducing the

insurer’s own losses from large insurance claims.

Further Reading

Gurenko, E., Lester, R., Mahul, O., & Gonulal, S. O.

(2006). Earthquake Insurance in Turkey: History of the

Turkish Catastrophe Insurance Pool. Washington, DC:

World Bank, 2006.

Turkish Catastrophe Insurance Pool: http://www.tcip.gov.tr

Contact

Eugene Gurenko, Lead Financial Sector Specialist, T

www.gfdrr.org/sites/gfdrr.org/files/documents/DFI_TCIP__Jan11.pdf.


Leave a comment

Insurance Premiums could come down 70% if National Pool established——-Institute of Actuaries calls for temporary national flood insurance pool AdviserVoice


 

 

The Institute of Actuaries of Australia (the Institute) today called for the creation of a temporary national insurance pool to subsidise premiums for high flood risk properties and to fund financial incentives for mitigation actions until mitigation strategies can reduce flood risks in the system to an acceptable level.

Commenting on its submission to the Natural Disaster Insurance Review (NDIR), Institute CEO Melinda Howes said, “While the Australian insurance market generally meets the needs of society, recent natural disasters demonstrate intervention in the market is necessary to assist consumers who are underinsured or not insured at all, particularly in the area of flood insurance.”

The Institute’s submission argues mitigation options aimed at protecting land and property from flood risks, such as revising building codes, planning rules, building dams and levies, and undertaking re-location and renovation of existing properties, are more likely to be cost-effective in the long term compared with the current approach of post-event funding of natural disaster-related losses.

“There are many pieces to the puzzle of natural disaster resilience and ideally insurance should be the last option.  To ensure insurance is affordable and accessible, it’s vital appropriate mitigation action is taken by all stakeholders, including all levels of government, consumers and businesses,” said Ms Howes.

The Institute recommends the creation of a national insurance pool until mitigation action eliminates or reduces the community flood risks to an acceptable level, which is expected to take 10 to15 years.  This pool could be funded by various options including taxpayer levies, a broad increase in premiums for all insureds or direct government funding.

“We recommend a temporary national insurance pool to provide subsidies to high risk insured parties rather than the government providing direct subsidies without pooling, and we recommend the subsidies be contingent on implementing risk mitigation measures,” explained Ms Howes. “Without this, risky behaviour such as continued building in high risk areas might be inadvertently encouraged.”

The Institute recommends a national insurance pool cover all “water off the ground” related loss to avoid confusion, and cover loss from both flood and actions of the sea, with a possible extension to other natural disaster risks if insurance affordability or accessibility is an issue.

In addition to a national insurance pool, the Institute recommends measures to better inform stakeholders, primarily through government sponsored national flood mapping to be made widely accessible to all stakeholders including all levels of government, businesses and consumers, as well as consumer information presented in a form which facilitates prudent behaviour.

“We strongly encourage the development of a single national standard for flood mapping in this country to support better risk mitigation efforts, risk pricing, risk exposure management and risk transfer mechanisms.  Stakeholders should contribute to the cost of these maps, depending on use,” said Ms Howes.

The Institute also suggests the government investigate purchase and/or issuing of catastrophe bonds or similar financial instruments to fund natural disaster-related losses, which could operate so that private investors purchase fixed rate government bonds with a redemption value that reduces on the occurrence of a natural disaster event.

“While the recent natural disasters have resulted in tragic economic and personal loss to people and businesses around Australia, we now have an opportunity to create a sustainable national solution for flood and natural disaster resilience which ensures we are better equipped for the future,” concluded Ms Howes.

 

 

 

 

 

 

 

Institute of Actuaries calls for temporary national flood insurance pool AdviserVoice.

 

An actuary is a business professional who deals with the financial impact of risk and uncertainty. Actuaries provide assessments of financial security systems, with a focus on their complexity, their mathematics, and their mechanisms (Trowbridge 1989, p. 7). The name of the corresponding profession is actuarial science.

Actuaries mathematically evaluate the probability of events and quantify the contingent outcomes in order to minimize the impacts of financial losses associated with uncertain undesirable events. Since many events, such as death, cannot be avoided, it is helpful to take measures to minimize their financial impact when they occur. These risks can affect both sides of the balance sheet, and require asset management, liability management, and valuation skills. Analytical skills, business knowledge, and understanding of human behavior and the vagaries of information systems are required to design and manage programs that control risk (BeAnActuary 2005a).

The profession has consistently ranked as one of the most desirable in various studies over the years. In 2006, a study by U.S. News & World Report included actuaries among the 25 Best Professions that it expects will be in great demand in the future (Nemko 2006). A study published by job search website CareerCast ranked actuary relative to other jobs in the United States as number 1 in 2010 (Needleman 2010), number 2 in 2012 (Thomas 2012), and number 1 in 2013 (Weber 2013). The study used five key criteria to rank jobs: environment, income, employment outlook, physical demands, and stress


Leave a comment

Insurance premiums could come down 70 % if a National Pool is established——-National pool to subsidise high insurance premiums the best solution, says Actuaries Institute


 

 

 

 

 

 

MEDIA RELEASE

National pool to subsidise high insurance premiums the

best solution, says Actuaries Institute

• High insurance premiums for flood-prone properties should be subsidised through a

temporary national funding pool

• Subsidies of premiums should be conditional on insurance policy holders and local

councils acting to reduce risk exposure

18 January 2012 – The financial impact on the insurance industry from floods and other

catastrophes, together with recent reports of significant premium increases, has prompted

the Actuaries Institute (the Institute) to reiterate today the need for a temporary national

pool to subsidise high insurance premiums.

“The Institute recommends the creation of a national pool of funds to subsidise the high

insurance premiums of people living in disaster-prone areas,” said Institute CEO Melinda

Howes. “However, any assistance provided shouldn’t encourage risk-taking behaviour

such as building in flood-prone areas.”

“Therefore it’s vital that any subsidies provided from the pool are conditional on policy

holders and local councils taking action to reduce the risk of damage from flooding, such

as carrying out the appropriate property renovations and building levees in high risk

areas.”

For a number of reasons, the Institute does not favour direct government subsidies to

insurance policy holders.

“The alternative to a flood insurance pool that has been suggested – the government

providing direct premium subsidies – means the government gives money straight to

insurers, providing no incentive for households or local councils to manage their own risk

exposure,” said Ms Howes. “A national pool could also help those people who are not in

flood areas but have seen premium increases.”

As noted in the Institute’s submission to the National Disaster Insurance Review (NDIR) in

July last year, a national insurance pool could be funded in a number of ways, including taxpayer levies, a modest increase in premiums for all insureds, or direct government

funding.

The Institute also emphasised today that strategic activity to mitigate the community’s

exposure to flood risk should be undertaken by the government as a national priority.

“Next time there is a flood, uninsured losses and the call on government-funded

compensation will be even greater. So the underlying cause of potential flood and other

natural disaster losses – inappropriate development – needs to be addressed urgently

with the right mitigation measures, including revising building codes and planning rules,

building dams and levees, and relocating properties. This really is a case of a stitch in

time saving much more than nine,” said Ms Howes.

Anticipating the incidence of future weather events, the Institute noted that Queensland is

not the only state where large cities and towns have extensive flood exposure, and that

the cost of future flooding in other states could also be substantial.

“The largest flood on record in the Sydney basin was in 1867. If that event occurred

today, large parts of eastern and inner Sydney and the Nepean plains would be flooded,

causing untold devastation and potentially significant loss of life,” Ms Howes warned.

The Institute supports some of the measures announced by the government in its

response to the NDIR, including increasing the level of public awareness of risks through

a flood risk information portal and moves towards a uniform flood definition, but

emphasised these measures would do little to address the fundamental aspects of

Australia’s natural disaster insurance strategy – high premiums and the need to mitigate

the community’s flood risk exposure.

ENDS

About the Actuaries Institute

As the sole professional body for actuaries in Australia, the Actuaries Institute represents the interests of its

members to government, the business community and the general public. Actuaries assess risks through

long-term analyses, modelling and scenario planning across a wide range of business problems. This

unrivalled expertise enables the profession to comment on a range of business-related issues including

enterprise risk management and prudential regulation, retirement income policy, finance and investment,

general insurance, life insurance, health financing, and climate change.

Media enquiries

Candice Sng

Honner Media

(02) 8248 3742 or 0412 800 781

candice@honne

 

 

 

 

 

www.actuaries.asn.au/Library/Submissions/MediaRelease/2012/CallsForFloodInsurancePool.PDF.

Follow

Get every new post delivered to your Inbox.

Join 832 other followers