It’s fair to say that the coronavirus pandemic has had a massive impact on the reinsurance industry – but just how bad will things get? According to reinsurance giant Swiss Re, it appears that prices are only going to increase.

The firm has pointed to further market hardening, but outlined a positive outlook for renewals. It expects price increases across all segments to continue, pushed on by low interest rates, growing risks and large claims.

The marine market is readying for another potential loss as the oil tanker MT New Diamond is still engulfed in flames off the coast of southern Sri Lanka — days after a fire broke out on board.

After a boiler explosion in the engine room, a fire broke out on board on September 3. The Sri Lanka Navy, Sri Lanka Air Force, Sri Lanka Ports Authority, the Indian Navy and the Indian Coast Guard have been working to extinguish the fire.

One crew member from the Philippines has died, while 22 remaining on board were rescued. The 270,000 metric tons of crude oil remain on the ship.

An official statement from the Sri Lankan Navy said however, that there is no risk of an oil spill. “Necessary steps are being taken to prevent the fire from spreading to those crude oil storage facilities.”

“Efforts are on to prevent the fire from spreading to the cargo oil. No information has been received of an oil spill yet. Firefighting continues,” the statement added.

Despite these assurances, the market is preparing for another

InsuranceAsia News (IAN) has reached out to market players for comment on the claims and loss adjusting side. Tanker fires are usually covered under traditional marine policies.

The fire is occurring only six weeks after the disastrous MV Wakashio oil spill off the coast of Mauritius. Shipowner Nagashiki Shipping holds cover from Japan P&I Club, who said they are making “internal estimates” on the claims cost and don’t have public figures to disclose yet.

For more on navigating marine risks and profitability, see here. 

MT New Diamond is a large, crude oil tanker built in 2000; it flies the Panama flag.

READ THE ARTICLE AT INSURANCE ASIA NEWS

IAG has unveiled a series of measures to support travel and small business customers hit by the coronavirus outbreak – and other insurers are expected to follow suit.

The general insurance industry has been under political pressure to develop a COVID-19 response similar to that announced by the banks, but insuranceNEWS.com.au understands it has not been possible to co-ordinate an industry-wide position.

Last night IAG confirmed its approach, which applies to direct and brokered insurance offered through its NRMA Insurance, CGU, WFI, SGIO and SGIC brands.

Suncorp is expected to announce similar measures either today or Monday, along with some other major insurers operating in Australia.

IAG’s key measures are:

• Travel insurance refunds for any unused proportion of premiums, including full refunds where

customers have not yet travelled and have not claimed

• Deferred premium payments for up to six months for small businesses experiencing financial hardship

• Refunds on the unused portion of premiums for small businesses who cancel their insurance, with no administration or cancellation fees

• Small businesses which need to close premises due to the impact of COVID-19 can maintain full insurance cover on the premises with no changes to premium

• Reduced timeframes in making payments to suppliers from 30 to no more than 15 business days.

IAG MD and CEO Peter Harmer says the virus is the latest disaster to hit communities “in what has been a catastrophic start to 2020”.

Mr Harmer says IAG is employing extra people to “bolster the company’s ability to respond to customer needs quickly and efficiently”.

“More than 90% of our people are now working from home, including our customer-facing staff who have been set up to work remotely since 2018,” he said.

“We are also employing up to an additional 400 people in the customer-facing parts of our business to help meet the needs of our customers at this time.”

IAG expects the measures to be in place by Monday.

Insurance Council of Australia (ICA) spokesman Campbell Fuller told insuranceNEWS.com.au that ICA “supports measures from its members that assist customers during the COVID-19 crisis”.

Australian market facing “unrest and uncertainty”

by Nicola Middlemiss 04 Jan 2020 | Insurance Business Australia 

The head of HDI Global’s Australian operations has commented on the instability of our local market, saying sweeping consolidation has had a notable impact on the landscape – and it’s unlikely to change any time soon.

“We have been experiencing a lot of unrest and uncertainty in the Australian insurance market with competitors leaving certain segments or the market altogether,” said Stefan Feldmann, regional head for ASEAN & Australasia for HDI Global.

Feldmann – who’s been with HDI since 2010 – also predicted that the consolidation process is likely to continue throughout 2020.

“Customers and brokers are understandably frustrated and longing for stable partners with a reliable longterm perspective and commitment,” he told Insurance Business.

“As an industrial mutual we are becoming more deeply established in the value chain as an integrated partner to our customers, much deeper than had previously been the case.”

Feldmann also predicted that the trend of pricing increases and tightening of terms and conditions will likely continue throughout 2020 and well into 2021, given the performance of most global and local insurance companies in recent years.

“The insurance industry as a whole has allowed fundamental technical underwriting principles to slip for quite some time which brought the industry to current market predicaments,” he said.

“We expect that insurance pricing and contract terms, based on technical fundamentals and risk quality, will be the key drivers for the insurance market in the corporate segment for the foreseeable future.” Feldmann also predicted that 2020 would be an interesting but demanding year for the insurance industry, partly due to the political instability which is fast becoming commonplace.

“2020 will not only be a fascinating year, but also a challenging one – with Brexit, US elections, trade wars and geopolitical unrest,” he told Insurance Business.

“While the Australian economy remains resilient, given the potential volatility in the global economy we will certainly feel the impact in the industrial insurance market in Australia.”

As an example, Feldmann pointed to the withdrawal and reduction in underwriting capacity from Lloyd’s of London, which has traditionally been a strong market participant in Australia.

“Our industrial clients also feel the impact of the trade wars between the US and Australia’s major trading partner, China,” he said.

Homeowners and businesses in north Queensland may soon find it difficult to insure their properties as flood risk rises due to climate change, new modelling has suggested.

According to Climate Valuation, flood cover will become difficult to obtain and too expensive for Townsville and other north Queensland communities, as the risk to homes from flooding is expected to more than double under climate change.

Modelling revealed that flooding in Townsville is already about 20% more to likely to occur than previously thought, and that total flood risk in the region is likely to shoot up by 130% by the end of the century, putting the waterlogged region “on track to become uninsurable,” Guardian Australia reported.

“Unfortunately, there are a lot of properties out there that planners in years past considered acceptable, but which homeowners may find are not insurable today or won’t be very soon,” Karl Mallon, director of science and systems at Climate Valuation, told the publication. “Generally, insurance companies often draw a line in the sand at the frequency of a one-in-100-year flood event. This means that as the risks of flooding increase, many Townsville houses will be uninsurable, or the owners will find cover unaffordable.”

A number of homes and businesses that have been impacted by the recent catastrophic flooding in Townsville said they did not have specific flood cover. The properties rated by city planning codes to be outside the “one in 100 years” flood zone, meanwhile, were reported to be effectively flood-free.

“We strongly urge people to check with councils and insurers if their homes are in flood zones, and if they can expect long-term affordable cover,” Mallon told Guardian Australia. “If not, they should know they will have to plan for the risks on their own and think about adapting their homes for climate change.”

CREDIT: INSURANCE BUSINESS AUSTRALIA