Swiss Re Corporate Solutions, the commercial insurance arm of the Swiss Re Group, has launched HazeShield, a standalone haze insurance solution for businesses operating in Singapore. This innovative coverage protects companies from a potential loss of income and reduced trade as a result of a haze event impacting Singapore.
Numerous severe haze outbreaks have struck Southeast Asia over the past two decades, largely due to the burning of peat forests in the region. Although governments and the private sector have made significant efforts to reduce haze, these will need time to fully take effect. In addition, meteorological factors and regional weather patterns can worsen the effects of the haze phenomena.
Haze-related losses can be significant. Total economic losses from just two haze-related events – in 1997 to 1998 and 2015 – amounted to approximately $1.3bn. Of this, nearly $900m stemmed from the 2015 event which predominantly impacted the transportation, tourism, health and education sectors.
"The financial consequences of a haze event can be severe, especially when businesses need to suspend operations or close," said Mr Didier Belot, head, Southeast Asia, at Swiss Re Corporate Solutions. "Up until now, conventional property insurance did not cover the financial losses resulting from a haze event. We designed HazeShield to bridge this gap, address a local issue and provide an extra layer of resilience."
The solution is based on a parametric trigger, meaning that pay-out amounts are pre-agreed and matched to specific customer needs and requirements.
The trigger for pay-outs is based on Singapore's National Environment Agency (NEA) Pollutant Standard Index (PSI) levels rather than loss or damage to physical assets. Unlike traditional insurance covers, HazeShield does not require loss investigations or adjustments and can be provided for two scenarios: a prolonged or extreme PSI level.
"In developing the solution with clients, we found that a range of industries, including transportation and tourism, are concerned about the financial impact from a severe haze event," said Mr Andre Martin, head of Innovative Risk Solutions Asia Pacific at Swiss Re Corporate Solutions. "HazeShield complements traditional property insurance policies, giving clients a broader coverage with claims payment certainty and quick access to liquidity."
HazeShield joins a suite of innovative parametric solutions developed by Swiss Re Corporate Solutions, such as Insur8 in Hong Kong and STORM in the US.