MILLIRE_2019_Annual Report

Milli Re Annual Report 2019 59 Activities and Major Developments Related to Activities Financial Status Risks and Assessment of the Governing Body Unconsolidated Financial Statements Together with Independent Auditors’ Report Thereon Consolidated Financial Statements Together with Independent Auditors’ Report Thereon General Information Financial Rights Provided to the Members of the Governing Body and Senior Executives Research & Development Activities Asia 2019 was a challenging year for the industry players in the region; considering that Japan was hit by two major catastrophes Typhoon Faxai in September and Typhoon Hagibis in October, whilst the markets were still trying to recover from the Typhoon Jebi loss of September 2018 as well as its significant creep recorded in the first half of 2019. The total insured loss amount caused by Typhoon Hagibis, the costliest event of the year, is estimated to be USD 10 billion, while for Typhoon Faxai this amount is expected to be around USD 7 billion. In the last quarter of 2019, while widespread bush fires took control of the whole country especially the state of New South Wales in Australia, there has been minimal progress in terms of taking the spread of fires under control. The total cost of the disaster to the insurance industry is estimated to be around USD 1.3 billion, which is highly believed to aggravate. Although 2019 has been a tough year for Australia and New Zealand in terms of natural catastrophes, the capacity was available in January 2020 renewals as programmes which provide cover for the region contribute to geographic diversity of many global reinsurers’ portfolios. The price movements for the loss hit programmes showed wide range of variety, while broad changes in the reinsurer panels of these programmes were inevitable. On the other hand, loss free programmes renewed with limited rate reductions up to 2%. In the midst of these challenges and significant losses from previous years, some reinsurers have withdrawn from certain lines of business and some have exited the industry altogether. As a consequence of this, even though a reduction in total capacity, especially in Engineering and Hull lines was observed; as rates spiked up within a short span of time; 2020 January renewals still remained to be orderly. Moving away from losses, insurance in the region is expected to get a boost from digital insurance. While the digitalisation in everyday life and the development of Insuretech would support the growth of insurance sector in the region, it caught the attentions that 2019 saw 21 applications for 5 Digital Bank Licenses in Singapore. Digital banks may just be that much needed conduit to boost online insurance and facilitate Insuretech. This may be an opportunity to increase insurance penetration and close the protection gap in the region. In USA, loss affected cat programmes saw risk-adjusted price increases between 10%-20%. 10-20% The total cost of the widespread bush fires disaster in Australia to the insurance industry is estimated to be around USD 1.3 billion.