Page 21 - Insurance Times September 2019

Premiums for bottom layers of Excess of Loss Treaty CAT Perils where local people cannot afford insurances
Programs. All such have proved to be 'insufficient'. and Insurers pay to the State Governments as Insured
Entity on behalf of this large section of people.
Thus, time is ripe to reconsider with the Golden Rule- "Back
Y The Sub-Continent of India's regions are to be classified
to The Basics!"
into Flood-Prone zones and Safe Zones. There shall be
compulsory Insurance for AOG Perils in every zone.
Rating of Risks in Direct Insurance is pricing a Risk's Insurance
This will increase overall premium base for entire Sub-
Protection before 'COSTS' of all factors are known! Burning Continent.
Costs reveal after a Catastrophe! Theoretically, adequate
Y Global Reinsurers act as One 'UNO'- United National
premiums may not be affordable by average clients! Any
revised THESIS becomes ANTI-THESIS! Organization of Global Reinsurances.
'Normal' conditions of Markets may allow some relaxed Y In Japan, the Earthquake Insurance scheme provides
norms but conditions are becoming 'Abnormal'. for JER- Japanese Earthquake Reinsurance Corporation.
On similar lines, NAT C AT Reinsurance Company can
There appears to be a Two-Fold Solution: be formed to reinsure the NAT CAT Pool and then
retrocede to Global Reinsurers.
Firstly: All NAT CAT AOG Perils should be covered only by
the Disaster Management Mechanisms of Central and State Y The State Governments have Disaster Management
Governments and Insurance/ Reinsurance Companies are Organizations which can have better Risk Management
to be agencies to implement such Disaster Management through Loss Prevention/ Minimization Associates
Schemes. educating all Risk Carriers.
Y Historical Temples, Forts Heritage Sites etc. should be
Alternatively, Natural Catastrophe Perils Insurance Scheme brought within Insurance Protection. This is imperative
is worked out and all concerned: Insureds, Intermediaries, after what happened to Kedarnath Temple in floods
Insurances, Reinsurances and Regulators work out a longer during 2014-15.
lasting solution with Uniformly Adequate Rates for Life and
General Insurance classes such as Property, CAR-EAR, Let us under-take innovative thinking process to find
Engineering, Goods in warehouses, Motor OD, Health and remedies to these NAT CAT Disasters! When a disaster
Crop Insurances etc. occurs, Management Disaster Scenario becomes visible!
We must mobilize all resources for a very effective NAT CAT
Secondly: A NAT CAT Market Poolmay be created with Disaster Management.
compulsory membership of all the market players with
various provisions… Risk Financing Solutions by Financial Reinsurances, ART
Y Uniform adequate Rating of AOG Perilswith payback products of various types besides traditional and conventional
periods of not less than 10 years in Direct Insurances- Insurances and Reinsurances needs to be implemented. Multi-
Life and General Insurances of Property, CAR-EAR, line Multi-year Insurance and Reinsurance products are to be
Engineering Goods in warehouses, Goods in Transit, considered with Finite Risks Solutions.
Motor Own Damage, Health, Crops etc.

Y No Competition in Direct writing of NAT CAT Perils Thus a fair combination of conventional Insurances and
Risks. Reinsurances and innovative products of Alternative Risk
Transfer Technologies are to be considered for a 'Realistic
Y Reinsurance Protection of NAT CAT Market Pool by only
And Longer Lasting Solutions' to the problem of covering
Excess of Loss Reinsurance Treaty Programs with
AOG Perils.
overall payback periods of not more than 10 years and
Reinstatement Premiums more than 100% of XL
Premiums for the bottom layers. Climate Changes and consequent phenomena of Natural
Catastrophes are to be effectively met. The World Bank
Y No Proportional Reinsurance Treaty Programs for the links Catastrophe and Pandemic Risk Financing Solutions
NAT CAT Market Pool! and extends helps to countries with high exposures to
Y There should be a way out for Insurers as members of Natural Catastrophes. Such financial supports can be
the NAT CAT Market Pool to insure State Government utilized to make Natural Perils Insurance and Reinsurance
to protect damages to persons and properties by NAT Schemes more comprehensive. T

The Insurance Times, September 2019 21