In­dus­try Up­dates

Insurance - - INDUSTRY UPDATES -

REIN­SUR­ANCE RATES DROP

Source: Bloomberg, 30 De­cem­ber 2013 Global prices for rein­sur­ance poli­cies up for re­newal on Jan. 1 de­clined amid an over­sup­ply of cap­i­tal in the in­dus­try, ac­cord­ing to a unit of Marsh & McLen­nan Cos. (MMC), the world’s largest in­sur­ance bro­ker. Rates for property-catas­tro­phe rein­sur­ance fell 11 per cent, driven by de­creases in the U.S., ac­cord­ing to New York-based Marsh & McLen­nan’s Guy Car­pen­ter di­vi­sion. Prices also fell for most other types of cov­er­age. Rein­sur­ers such as Mu­nich Re and Swiss Re Ltd. help providers of pri­mary cov­er­age such as Amer­i­can In­ter­na­tional Group Inc. (AIG) and Al­lianz SE (ALV) shoul­der the costli­est claims. An in­flux of cap­i­tal from in­vestors, strong bal­ance sheets and lower-than-aver­age losses from nat­u­ral dis­as­ters meant that sup­ply of­ten out­stripped de­mand, the Guy Car­pen­ter re­port said. The in­dus­try had about U.S.$322 bil­lion (MYR1,059 bil­lion) in ded­i­cated cap­i­tal at the end of 2013, a near­record level, ac­cord­ing to the re­lease. Global in­sured losses were about U.S.$40 bil­lion (MYR131.5 bil­lion) in 2013, U.S.$20 bil­lion (MYR66.75 bil­lion) less than the 10-year aver­age.

U.S.$1.00 = MYR3.29

MO­TOR IN­SUR­ANCE PRE­MI­UMS, SER­VICES TOO COSTLY

Source: Gov­er­nance & Com­pli­ance Mag­a­zine, 19 De­cem-

ber 2013 The Com­pe­ti­tion Com­mis­sion (CC) has found that mo­tor in­sur­ance pre­mi­ums and ser­vices pro­vided by com­pa­nies are too costly. The CC aims to re­duce these costs. Ac­cord­ing to CC, the chain of set­tle­ment for non-fault claims is com­plex and in­creases the cost of re­place­ment cars and re­pairs, which is passed on to in­sur­ers of at-fault mo­torists, re­sult­ing in higher mo­tor in­sur­ance pre­mi­ums for all driv­ers. CC es­ti­mates the ex­tra pre­mium costs are be­tween £150 mil­lion (MYR806.67 mil­lion) and £200 mil­lion (MYR1,076 mil­lion) a year. CC also found that fol­low­ing an ac­ci­dent, too many re­pairs are not com­pleted to stan­dard. Prob­lems were also found with the sale of ad­don prod­ucts to con­sumers, and with the con­tracts be­tween price com­par­i­son web­sites and in­sur­ers. In ad­di­tion, con­sumers have limited in­for­ma­tion about “add-on” in­sur­ance prod­ucts, while in­sur­ers have a pointof-sale ad­van­tage. So it is dif­fi­cult for con­sumers to iden­tify the best-value of­fers in the mar­ket, and add-ons may be priced too high. Also, con­tracts be­tween price com­par­i­son web­sites and in­sur­ers can re­quire that in­di­vid­ual in­sur­ers’ pre­mi­ums are not of­fered more cheaply else­where. CC has pub­lished a no­tice of pos­si­ble reme­dies out­lin­ing mea­sures it could in­tro­duce or rec­om­mend to im­prove com­pe­ti­tion. Any in­ter­ested party can re­spond to the pro­vi­sional find­ings re­port by 7 Fe­bru­ary 2014.

£1.00 = MYR5.38

NAT­U­RAL CATAS­TRO­PHES, MAN-MADE DIS­AS­TERS COST IN­SUR­ERS USD 44 BIL­LION

Source: Swiss RE Press Re­lease, 18 De­cem­ber 2013 Ac­cord­ing to pre­lim­i­nary sigma es­ti­mates, in­sured losses from nat­u­ral catas­tro­phes and man-made dis­as­ters in 2013 were around USD44 bil­lion (MYR144.65 bil­lion), down from USD81 bil­lion (MYR266.29 bil­lion) in 2012. In­sured losses from nat­u­ral catas­tro­phes were at least USD38 bil­lion (MYR124.93 bil­lion), down from USD75 bil­lion (MYR246.75 bil­lion), while man-made dis­as­ters gen­er­ated the re­main­ing USD6 bil­lion (MYR19.73 bil­lion) of in­sured claims. The over­all eco­nomic losses from cat­a­strophic events in 2013 reached USD130 bil­lion (MYR427.38 bil­lion), com­pared with USD196 bil­lion (MYR644.36 bil­lion) in 2012. The to­tal loss of life climbed to around 25,000 in 2013 from 14,000 in 2012. In Novem­ber 2013, Typhoon Haiyan hit the Philip­pines and claimed more than 7,000 lives, which is the high­est loss of life from a sin­gle event in 2013. The flood­ing that af­fected large ar­eas of cen­tral and East­ern Europe in June 2013 cre­ated over­all losses of USD18 bil­lion (MYR59.18 bil­lion), with in­sured losses es­ti­mated at USD4 bil­lion (MYR13.15 bil­lion). Also in June, rain­in­duced flood­ing hit Al­berta, Canada,

caus­ing in­sured losses of nearly USD2 bil­lion (MYR6.58 bil­lion), the high­est ever recorded in the coun­try for any dis­as­ter. There were also heavy rains and floods in Aus­tralia, In­dia, China, In­done­sia, South­ern Africa and Ar­gentina in 2013.

USD1.00 = MYR3.29

TALK OR­GAN­ISED TO ED­U­CATE YOUNG LEAD­ERS

Source: The Star, 16 De­cem­ber 2013 The Gen­eral In­sur­ance As­so­ci­a­tion of Malaysia (PIAM), through its Young Man­ager’s Think Tank (YMTT), held a break­fast talk themed, “Pas­sion For Suc­cess” for 60 young man­agers from the gen­eral in­sur­ance in­dus­try. The YMTT in­vited Teach For Malaysia co-founder and man­ag­ing di­rec­tor Dza­meer Dzulk­i­fli to speak. Es­tab­lished in 2010, Teach For Malaysia is an in­de­pen­dent, non-profit or­gan­i­sa­tion that aims to end ed­u­ca­tion inequity in Malaysia. Dza­meer en­gaged the young man­agers by shar­ing his child­hood ex­pe­ri­ences, which he says con­trib­uted to his suc­cess as a young leader at Teach For Malaysia. He ad­vised that de­lay­ing crit­i­cal de­ci­sions on ca­reer paths or pas­sions could pos­si­bly re­duce one’s true po­ten­tial. He also em­pha­sised the im­por­tant val­ues of Teach For Malaysia: the sense of re­spon­si­bil­ity, ex­cel­lence, col­lab­o­ra­tion and in­te­gra­tion. In ad­di­tion, Dza­meer em­pha­sised that the most ef­fec­tive way to im­ple­ment val­ues is to demon­strate it and prac­tice ac­count­abil­ity, op­posed to merely preach­ing it to sub­or­di­nates. He stressed the im­por­tance of a legacy of pos­i­tive val­ues. The talk is one out of var­i­ous ini­tia­tives that ad­dress the need to col­lec­tively re-brand the gen­eral in­sur­ance in­dus­try as an at­trac­tive em­ployer of choice and the need for proper talent man­age­ment.

Dza­meer Dzulk­i­fli

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