Disaster risk finance through a PPP (public-private partnership) model is the need of the hour as such partnerships would help nations recover quickly from the impact of a major natural disaster, said Dr Olivier Mahul, the World Bank's global lead and programme manager of disaster risk financing and insurance programme.
Speaking at the 15th Singapore International Reinsurance Conference (SIRC) yesterday, he said, “Disasters will generate different needs, but governments do not have enough short-term liquidity in their budgets to rapidly respond to disasters.”
Asia, over past few decades, has faced some of the deadliest and costliest disasters in history and these include the tsunami that hit Indonesia and other countries in 2004, floods in Thailand in 2011 and in Myanmar in 2015 and the recent floods in India. The frequency and severity of natural calamities as an impact of climate change continue to rise and are an increasing drain on public finances.
Dr Mahul spoke of the critical role played by the World Bank in disaster finance. “The World Bank acts as a partner through our analytical and advisory services, financial services and convening services,” he said.
Pricing adequacy - a major concern for reinsurers in Asia
A panel discussion yesterday on the topic ‘Reinsurance reloaded – Asian Reinsurer Response,’ moderated by NMG consulting’s partner, Roshan Perera, revealed that pricing sustainability is the prominent concern of reinsurers in the Asian region.
ACR Capital Holdings, Group CEO, Bobby Heerasing, said that the reinsurance industry is driven by the availability and deployment of capital and this is in abundance today, which places pressure on pricing.
“Dedicated reinsurance capital amounting to $340bn is available in the reinsurance market in 2017-2018 out of which 75% is traditional capital and the balance 25% is contingent capital, mostly from hedge funds, cat bonds and ILS; but 10 years back, the ratio of traditional capital versus contingent capital was to the tune of 95:5, but today there has been a massive influx of external capital in the markets,” he said.
Malaysian Reinsurance Berhad’s president & CEO, Zainudin Ishak, said that the reinsurance industry provides yeoman’s service to the primary market which the alternative markets cannot provide. “We need to be disciplined in our underwriting practices and develop a coherent strategy for the industry that will see greater engagement between the public and private sectors and also invest in technology and people,” he said.
Mitsui Sumitomo Insurance Company’s general manager, Ms Sachiko Hori, spoke about the huge protection gap in Asia and challenges from the growing ageing population. “There is a huge protection gap across Asia and this helps our industry to grow; and at the same time the growing ageing population is an area of concern which has to be jointly addressed by the public and private sectors,” she said.
Thai Reinsurance PCL director & CEO, Dr Oran Vongsuraphichet, said that many markets in Asia had small and medium sized insurance and reinsurance companies that face unique challenges in terms of pricing and retention. “There needs to be greater collaboration between insurers and reinsurers in the markets in Asia. Technology is critical to reach out to the people in these markets,” he said.
The SIRC, which concludes today, was attended by 1,027 delegates from 50 countries, the highest attendance recorded in the history of the event. The conference was organised by the Singapore Reinsurers’ Association in conjunction with the Reinsurance Brokers’ Association of Singapore, as well as Asia Insurance Review as the official media partner.