Insurers have $328 b gap in uninsured CAT losses to fill

Friday, 17 February 2012 00:01 - - {{hitsCtrl.values.hits}}

The global insurance industry experienced US$107 billion in insured CAT losses in 2011, but this was far from the $435 billion economic losses that disasters cost last year.

This poses a long-term challenge to insurers on how they could fill the $328 billion gap in uninsured losses and encourage risk transfer through insurance, said Dr. Richard Ward, Lloyd’s CEO, at the 12th Asia CEO Summit in Singapore this week.

He noted that like 2011, 2012 is a challenging year for the industry as it faces pressure both in premiums and investment income amidst the threat of another recession in the West and economic slowdown in various parts of the world.

Chartis President and CEO, Asia Pacific Region Chris Townsend highlighted the need to educate industry stakeholders like governments of the various roles insurance can play in society.

He urged the industry in Asia Pacific to use its recent CAT experiences, which he said had raised awareness of insurance, to distance itself from the banking sector and promote the “brand insurance” in order to attract more talent into the industry.

Instead of fighting within the industry for talent, he urged insurers in the region to fight with other industries like banking and investment. He called on insurers to collectively reach out and commit time, money and leadership to ensuring a flow of talent into the industry, particularly in Asia’s emerging markets.

On the question of what indicators CEOs have on their dashboards, Vincent Vandendael, Zurich Financial Services’ CEO, Global Corporate Asia Pacific, said that it is equally important for insurers to have indicators that tell them what not to do and not to write. Chartis Chairman and Head of Distribution, Asia Pacific Leslie Mouat, said that there is no one dashboard that fits all, adding that a CEO has to make sure risk is priced properly and distribution is done right.

For India’s L&T General Insurance CEO Joydeep Roy, he looks at what shareholders want and at his company’s underwriting profit versus set benchmarks.

Raheja QBE General Insurance CEO and Managing Director Praveen Gupta said that in benchmarking for success, he looks at people, products and processes, while Vandendael said his company measures success by its shareholders, customers and employees, with each having its own benchmark.

Organised by Asia Insurance Review together with The Geneva Association, the 12th CEO Insurance Summit in Asia attracted more than 130 delegates from 22 countries. It was supported by the International Insurance Society and Singapore’s General Insurance Association and Life Insurance Association, and sponsored by Chartis, A.M. Best, HSBC Insurance, Labuan IBFC and Zurich.