Munich Re has been studying and documenting the effects of natural disasters since the 70s, and by collecting data on thousands of extreme global weather events, is able to better identify regional and worldwide risk, the reinsurer told Insurance Business.
This comment comes in the wake of the recent Category 5 hurricanes that made landfall in Florida (Irma) and Texas (Harvey), the significant damage they caused to the Caribbean islands and surrounding areas, as well as the devastating earthquakes in Mexico.
It also comes after the reinsurer announced the expected insured losses from the hurricanes could mean it misses its 2017 profit guidance of $3.29 - $3.95 billion.
Munich Re said it would take months, even years, to know the final estimate of insured losses these complex events caused, but it would be significant.
Munich Re spokesperson Silke Kunstreich said “it’s highly likely that the loss will be significant. Following many loss-free years, this event is a realistic reflection of what is likely to be normal claims activity in the future.”
Kunstreich said Munich Re would “certainly hold a number of discussions now [with clients] about the adequacy of our prices, particularly in catastrophe insurance.
“This event, together with others that could (still) take place this year, could result in immediate demand for back-up covers.
“It might raise questions regarding the impact on the ART market and whether the collateral of catastrophe bonds/ILS transactions remains locked at year end, and will certainly have an impact on the pricing of catastrophe covers. Munich Re stands ready to help our clients with know-how solutions, and the necessary capacity based on adequate technical prices and conditions.”
Kunstreich said that by studying extreme weather events and collecting data on the insured losses they produced, the reinsurer was able to analyse regional and global exposure to risk, and identity trends. The reinsurer said its disaster register had 28,000 entries of recent and past natural catastrophe losses, which it has been collecting since the 70s. Every year, around another 1,000 entries are added to the database.
Kunstreich added that natural catastrophe losses remained largely “uninsured worldwide – even in highly developed markets.”
Although Munich Re doesn’t know the exact level of losses from Harvey and the severe monsoon flooding in India, it’s already clear that there is a considerable gap between economic losses suffered and the amount covered by insurance, she noted.
Kunstreich said “as a general policy, we never comment on any individual client relationships” when asked how the reinsurance costs from the recent global catastrophes could affect New Zealand-based insurance providers.
Munich Re is a member of the Insurance Council of New Zealand (
ICNZ).
Related stories:
Reinsurers might want to re-negotiate post-Kaikoura
Kaikoura claims already top over $2 billion
.jpg)
