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Doha, December 2, 2012
Europa Re Value PropositionA brief outline
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Riccardo CiccozziHead of Business Development
Agenda
Context
– SEE Exposure to Natural Disasters– Natural Disasters’ impact in SEE– Catastrophe Insurance Markets
Project
– Vision and Market Value preposition– Key services– Main Steps
Challenges ahead
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Major Natural Disasters in South East Europe
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Source: Mitigating the Adverse Financial Effects of Natural Hazards on the Economies of South Eastern EuropeA Study of Disaster Risk Financing OptionsSouth Eastern Europe Disaster Risk Mitigation and Adaptation Programme - Eugene N. Gurenko Wael ZakoutThe World Bank, Sustainable Development Department Europe and Central Asia Region and UN/ISDR secretariat Europe February 2008
Nat Cat Risk Regional Exposure
Nat Cat Damage Impact
Private Insurance?
Europa Re Solution
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South East Europe (SEE) is highly vulnerable to natural disasters Climate Change is expected to worsen the region’s exposure
Adverse impacts on governments’ budgets
Socio-economic implications on households
Adverse economic effects on business
Very Low Cat Insurance Penetration
Lack of Risk Awareness
Market Growth Potential
Strong Wind Flood Heat Waves Drought Quake
Market Infrastructures to develop
Catastrophe and Weather Risk Insurance for
Households, SMEs and Farmers
Europa Re - Business Model – Vision & Mission
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A Swiss-based company owned by countries of Southeast Europe (SEE)
Supported by the World Bank, EU, UNISDR, SECO and GEF
Providing innovative technology-driven solutions to SEE insurers writing catastrophe and weather risk insurance products
Vision - Increase the level of catastrophe insurance penetration amongst households, small and medium enterprises (SMEs) and farmers in the SEE region
• Educating consumers• Improving and standardize credit quality of insurance products• Enabling insurers to sell weather and catastrophe risk insurance• Helping governments and insurance regulators
MissionEuropa Re Project
Key Services - Risk Management
Market Issue: lack of high-resolution and reliable catastrophe (cat) models for SEE cat exposures
ERe Solution: provide local insurers with state-of-the-art probabilistic cat modelling tools based on the latest technology offered by Market Leaders
Main Benefits: High-resolution Models available at a much lower cost
ERe’s Cat Models’ technology is underpinned by:
– AIR’s global research in catastrophe risk modelling– Country specific risk data– Unique business applications
ERe’s Risk management systems allow insurers to accurately evaluate:
– Potential losses resulting from catastrophe insured risks at any point in time;– Net retention capacity relative to available solvency.
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Key Services - What will Europa Re do for Consumers
Government As result:
- Consumers’ profit and assets are better protected
- Higher incentive to produce
Outcome
- Increased production
- Increased income
- Higher contribution to economy
Insurance companies
• Direct subsidies
• Insurance premium subsidies
• Basic Insurance protection
• Specialized Insurance protection
Europa Re
Expertise on improving the
subsidy scheme
New user friendly and affordable
products
Know how
Awareness
Education
Development of distribution channels
New Parametric Insurance Products
Improved market mechanism
Con
sum
ers
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Key Services - What can be expected from ERe products
Products
Simple
Affordable
Easily accessible
Reliable
Covering consumers’ production
needs
Innovative
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Earthquake and Flood insurance for homeowners
and SME’s
Weather insurance
products for agriculture
Other as explored to fit market needs
fast and simplified loss settlements
Remote Sensing & Cat Modelling Technologies
Europa Re Parametric products
1. Precipitation
2. Temperature
Main principle of parametric weather insurance:
Coverage in case of unusual behavior of weather
excessiveprecipitation
drought(minimal rainfall)
high heat low heat freeze
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Example: Drought insurance
What triggers an insurance event?
when total amount of
precipitation for the period is below the minimum threshold
What types of thresholds?
1. minimum threshold for
period2. maximum threshold for
period(based on long
term average for period)
What precipitation values are accepted?
daily values of precipitation
measured officially by Authorized
National Weather Service
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Pre-event Post-EventEvent timeline
Geocoding at the time of underwriting
Pre-event Imagery
Exposure data
Protocols
• Claims submission• Assignment• Evaluation in-house or
send adjustors to review
• Phase 3 Claims settled
Phase148-72 hrs
• Imagery data collection • Remote Damage
Assessment • Phase1 Claims settled
Phase 21-2 weeks
• Effectively target adjustors and claims resources
• In-field damage assessment
• Phase 2 Claims settled
Phase 3within weeks
Claims Adjusting and Management
Financial Management
Before/After image comparison
Work Management Documents I Correspondence I
I Contacts I
Litigation Subrogation
Salvage
A new perspective for claims
Event
Event Monitoring & immediate notification
Main Sequencing Steps – starts Nov 2012
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Platform Testing• Nov 2012 to May 2013
Compatibility and proper functioning of the systems• Dec 2012 to June 2013
Europa Re Accreditation Sales Certificates• May 2013 on-going
Europa Re Accreditation Claims Reporting Certificates• June 2013 on-going
Europa Re New Products Launch• June 2013 to Dec 2014
Education and Promotion• Starts June 2013
Challenges ahead
Government Involvement:
– To educate, regulate and incentivize
Consumers’ resistance:
– Lack of risk awareness / low trust in private insurance
Insurance Industry Resistance:
– What’s in it for me?
But,
Engage & Innovate Lessons from the Macedonian farmers
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New Legislation and regulations shall be issued in SEE to foster private cat insurance
Promotional activities shall target directly consumers in the region
Local Insurers to enter into formal cooperation by June 2013
Launch of first New Products in October 2013
