(FS.4.01) Insurers' Business Model

Insurers have warned that climate change could make coverage for ordinary people unaffordable after the world's largest reinsurance firm blamed global warming for $24bn (£18bn) of losses in the Californian wildfires.
Under a severe scenario, COVID-19 insurance and reinsurance industry losses for key classes of business in the U.S. and the UK (including the London Market) could be at least $80 billion.
Re/insurance broker Aon is expecting another strong year for the bulk annuity market in 2020 after business reached a record high of £42 billion last year.
Bm, ILS and funds held for flood risk are a small portion of the more than $40 billion US held in the reinsurance/ILS market.
In 2018, the global Reinsurance market size was US$254900 million and it is expected to reach US$318900 million by the end of 2025, with a CAGR of 3.3% during 2019-2025.
Optimism is high in the reinsurance industry this year, and there appears to be some confidence that the market's outlook will improve further.
Japanese typhoon Hagibis could eventually drive in excess of $10 billion of insurance and reinsurance industry losses, which when added to the other recent typhoon Faxai could see the 2019 typhoon season leaving a larger dent in the industry than 2018's Jebi and Trami combined.
Reinsurance giant Munich Re is anticipating a tepid rate environment at the mid-year 2018 reinsurance renewals, but is targeting further growth into the United States market, where its share remains below its global average.
There is a 99 percent probability that by 2033 human telemarketers and insurance underwriters will lose their jobs to algorithms.
Reinsurance company Munich Re warned in 2019 that insurance premiums for private individuals may become so high that insurance against climate change will become a social problem.
Estimates currently put the total insurance and reinsurance industry losses from Faxai in the region of $3 billion to $7 billion.
Catastrophe modeling firms and reinsurance sources expect typhoon Faxai to cause $3 billion to $5 billion worth in insured losses in Japan.
Insurers have warned that climate change could make cover for ordinary people unaffordable after the world's largest reinsurance firm blamed global warming for $24bn (£18bn) of losses in the Californian wildfires.
FEMA has transferred $4.322 billion of its flood risk to the capital markets through reinsurance in 2017, 2018, and 2019.
Typhoon Lekima's insurance and reinsurance industry impact in China is expected to exceed US $855 million (CNY6 billion).
Reinsurance firm Swiss Re recently said that the global market for personal cyber insurance could grow to be worth more than $3 billion by 2025.
PricewaterhouseCoopers estimates that the introduction of blockchain technology in reinsurance could remove 15-25 % of expenses, delivering an industry-wide savings of $5 billion-$10 billion.
Automation will cause an 8% decline in the numbers of US bank tellers between 2014 and 2024 and the number of insurance underwriters will drop by 11%.
Recent catastrophe losses are expected to result in losses of $136 billion for the re / insurance industry.
The drop in individual premiums as a result of driverless cars will begin in 2026 and could be as much as a $25 billion loss for insurers by 2035.
In non-life reinsurance, global premium growth is expected to be 2.7 percent in 2017 and 2.9 percent in 2018, based on increasing cessions from emerging markets.
Deteriorating conditions in the global reinsurance market and fickle alternative capital sources could push up insurers' capital costs.

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Last updated: 26 May 2020