Pandemic insurance contracts were ‘less ambiguous’ in Asia
The wording in pandemic insurance contracts written in Asia-Pacific were often tighter than those in more developed markets due to the region’s additional experience with contagious diseases.
That is according to Franz-Josef Hahn, the chief executive officer of reinsurer Peak Re, speaking to Dominic Christian, global chairman of Aon’s Reinsurance Solutions, as part of the broker’s Virtual Reinsurance Renewal Season fireside chats.
Aon says the goal of its fireside chats is to drive growth across the re/insurance industry in order to bring capital closer to clients’ needs and enable them to flourish in a stronger economy. The series will discuss the challenges and opportunities facing major re/insurers and insurance buyers, sharing both perspectives.
“Specifically, when you look at COVID-19, this part of the world is going through its fifth epidemic this century, and this century is only 20 years old. There are many fewer problems on the wordings side in respect of pandemics in Asia,” Hahn said.
Looking ahead to the January 1, 2021 renewals, Hahn highlighted that the period represents a chance for reinsurers “to correct pricing”—a move he believes necessary for the development of a sustainable marketplace.
“Otherwise, the marketplace is not going to go any further and capacity will no longer be provided,” he said.
“This industry needs to develop affordable risk management as a service to the small and mid-sized enterprises market.”
Franz-Josef Hahn, Peak Re
Hahn said that Hong Kong-based global reinsurer Peak Re was committed to providing cover for cyber risk, but said the company took a “more cautious” approach to this line of business due to the inadequate resources that some firms had allocated to dealing with their cyber exposures.
He urged the industry to assist its clients in managing cyber risk. “This industry needs to develop affordable risk management as a service to the small and mid-sized enterprises market to create a better basis for the insurability of cyber risk,” he said.
Hahn highlighted water shortages as being a key driver of global conflict in the future.
“Water reduction will be one of the biggest challenges to humankind in the future, and it is already. We see across Asia that water is not necessarily readily available to all.
“We will face migration because of this and possibly also—and this goes beyond insurance—conflicts about water more in the future; we see them now already, but this will develop.”
Hahn added that insurance had to be “an integrated part of working for the better for the future”.
He highlighted the continued potential of the growing Asian insurance markets, acknowledging that strongly growing aggregates in markets such as China would require the capacity of a range of capital sources.
Main image: shutterstock.com / Sushiman