The Risks of Hazard

As this blog likes to point out, the best way to evaluate flood risk is with risk scoring. We could look back at how it improves underwriting, we could watch it in action, how it works, or go deep into how it works in a specific region (like California’s Central Valley).

This week I’m attending the Singapore International Reinsurance Conference (SIRC), the largest Asian gathering of the reinsurance industry, including brokers and reinsurers, and the cedants who are their clients. The first thing I learned is that reinsurers are rejecting their recent labeling as “traditional reinsurers”, as new “alternative” capital moves into reinsurance. They now prefer to call themselves “professional reinsurers”. Sounds good!

It is time to name a 21st century phenomenon by which bad news or possibilities are blown out of  proportion. Examples would be self-diagnosis on the web (by which sniffles can turn into brain cancer), or the appearance that events in the news are worse than they actually are. Maybe we could call it “Negativity Amplification”. We could even look at Harvey to explore it.

Here is a Reuters article from July (pre-Harvey and the rest of this year’s storms) that explores how parametric flood insurance is a viable way to get necessary coverage in place to help cover the vast Asian protection gap. A little extra research turns up parametric programs in Bangladesh, and then China. Very cool stuff.

Last week, Catherine and I were in San Diego with colleagues and friends at the WSIA (Wholesale and Surplus Insurance Association), which is the combination of NAPSLO and MGAA. Last year was my first time at this show, and everything I wrote about it last year I would write again. This year the event was held two weeks after Harvey, and while Irma continued to storm in the southeastern states. Needless to say, flood was an ubiquitous topic of conversation.