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States to Push Private Flood Market Development Trough Data
US insurance regulators are planning a new push to develop private flood insurance markets in their respective states by increasing the data collection from private insurers and making it public.
The proposals were discussed during a recent National Association of Insurance Commissioners (NAIC) and will be on the agenda at the December 9 meeting of the NAIC’s Property Casualty Insurance Committee.
Under consideration are:
- Separating information collected of residential flood insurance premiums from commercial premiums.
- Breaking down data by stand-alone policies and endorsements of homeowners policies by both first dollar and excess.
- More robust claims and policy data.
A report developed by the NAIC on the issue argues that a “flood insurance gap” exists in the US since 69% of properties in high-risk flood zones do not buy coverage provided by the National Flood Insurance Program.
Concurrently, there has been a heightened interest amongst private carrier to expand their residential flood insurance offerings, greatly assisted by the development of sophisticated flood mapping and risk modeling technologies.
The NAIC had already begun preparing for changes to the data collected from private insurers, including expanding disclosure process that is part of its annual “data call” that drives the examination process. According to NAIC documents, data collected through the expanded data call will be publicly available in a similar way to the annual statement that is published as part of the annual statement.
Windstorm Budget Once Again Under the Knife
The U.S. House Science Committee is holding a hearing today to set the table for reauthorization of the National Windstorm Impact Reduction Program which has already seen its budget cut from previous years.
The program studies windstorms, including tornados and hurricanes, and conducts research to help mitigate their impacts by offering improvements in building codes and risk assessments. It is part of the National Institute of Standards and Technology (NIST).
NIST budget was flat in fiscal year 2019, while funding for research facility construction was cut sharply.
The windstorm program was originally authorized in 2004 and the statutes governing it were last updated in 2015, when Congress transferred principal responsibility for it to the NIST.
Despite Reinsurance Exit, Bank of Montreal Faces Another $25M Typhoon Hit
Bank of Montreal disclosed a $25 million pre-tax and after-tax reinsurance adjustment in the latest quarter resulting from the net impact of major reinsurance claims from “Japanese typhoons.”
The charge comes after BoM already announced its decision to wind down its reinsurance business last quarter.
BoM decided to exit reinsurance after determining that pricing pressure and increase catastrophe frequency made the sector unattractive.
“In light of the environment in the reinsurance sector, performance is no longer meeting our risk-return expectations, and so we’ve made the strategic decision to exit the majority of this business,” the bank said during an investor conference call.
According to an updated F-1 filing with the U.S. Securities and Exchange Commission (SEC) on Monday, the firm aims to raise between $432 million and $504 million via the offering of 36 million American depositary shares (ADSs) at a price of between $12 and $14. Each ADS represents three ordinary shares.
One promising area is Chang's novel market-consensus hurricane forecasting model where she uses market transaction price changes for cat bonds to predict when a hurricane will make landfall, how destructive it will be and how the destructive power will evolve from inception to landing.
Valuation is a key discussion point in the collateralised reinsurance and catastrophe insurance-linked securities market right now. Over the course of the loss years of 2017 and 2018, Pillar Capital Management Limited (Pillar Capital) has been very focused on its reserving practices and making sure it allocates changes to the NAV into the month that they occur with limited variability.
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