Page 18 - The Insurance Times October 2024

In several reinsurance sectors, claims Nepal Insurance Authority claims, a number that is expected to
inflation is surpassing general eco- grow as more damage assessments are
nomic trends. Contributing factors in- and Insurers Commit to completed.
clude rising damages in the US, driven Streamlining Claim Settle- Poshak Raj Paudel, president of the
by social inflation, increasing medical Nepal Life Insurance Association, em-
costs, and shortages of construction ments Amid Flood-Related phasized that insurers are actively
materials and labor, all of which are Losses
working on prompt claim settlements.
pushing claims costs higher. The Nepal Insurance Authority (NIA) He pointed out that as of mid-Septem-
According to data from AM Best/Guy has pledged to simplify and expedite ber 2024, only 42% of Nepal’s popula-
Carpenter, global reinsurance capital is the process of settling insurance claims tion had access to insurance. Given
projected to reach $515 billion by in response to the widespread damage that Nepal ranks fourth globally in vul-
2024. Although the market for alter- caused by recent floods and landslides nerability to climate change and fifth
native risk capital has seen modest following continuous rainfall. In a re- in lightning risk, there is a pressing
growth, its overall influence on the cent meeting, NIA and insurers agreed need for comprehensive insurance cov-
reinsurance market remains limited. to make claim settlements faster and erage. A study by the United Nations
Demand for reinsurance capacity re- reduce procedural delays. on insurance and risk financing high-
mains strong, helping to stabilize the Sushiledev Subedi, director and spokes- lighted that Nepal has spent an aver-
market at elevated levels. person for NIA, announced that the age of Rs 50 billion annually on disas-
Thomas Blunck, a member of Munich authority would eliminate the need for ter reconstruction between 2012 and
Re's board of management, empha- certain documents like police reports 2020.
sized the critical need for the reinsur- and recommendations from relevant Chunkey Chhetri, president of the
ance sector to achieve adequate earn- bodies, allowing for quicker claim pro- Nepal Insurers' Association, assured
ings. He pointed out that the sector cessing. In addition, insurers have been that insurers are fully prepared to ex-
failed to meet its cost of capital in four directed to provide daily updates on pedite the settlement of claims. He
of the past seven years, stressing the the status of claims and payments to also urged the NIA to further simplify
importance of risk-adequate rates to ensure transparency. the process, especially as damage as-
manage increasing volatility and expo- Insurance companies have already sessments are still underway.
sures, which in turn demand more risk started receiving claims related to The industry’s combined efforts aim to
capital. damages from the floods, which have mitigate the impact of natural disas-
Munich Re is focusing closely on devel- impacted a wide range of assets, in- ters and ensure faster recovery for af-
opments in key areas, particularly natu- cluding hydropower projects, ware- fected individuals and businesses.
ral catastrophes and climate change. houses, and vehicles. With significant
Insured losses from natural catastro- destruction to homes, agriculture, live- Primary Insurers Assume
phes are on the rise, now frequently stock, and hydroelectric infrastructure, More Risk Amid Changing
exceeding $100 billion annually, driven insurers are preparing for a continued
by events such as hurricanes and earth- influx of claims. However, key public Reinsurance Dynamics
quakes. Additionally, non-peak perils, infrastructure, such as roads and Natural catastrophe losses in the first
including severe thunderstorms, torna- bridges, remain uninsured, largely due half of 2024 were driven largely by
does, floods, and wildfires, are contrib- to the government’s limited awareness medium-sized events. Global reinsurers
uting to the overall increase in insured of insurance benefits in these sectors. are adopting stricter terms and condi-
losses. Climate change is believed to be Surya Silwal, chairman of the NIA, tions to limit exposure to secondary
a factor in the growing frequency and called on insurers to swiftly settle peril events, as weather-related losses
severity of these events. claims to address public concerns that continue to increase in frequency and
insurers are hesitant to pay out claims. volatility due to climate change, ac-
In response, Munich Re is investing in
the development of new and en- He stressed the importance of timely cording to Fitch Ratings.
settlements to maintain confidence in
hanced risk models and is strengthen- The tightening of natural catastrophe
ing its global diversification strategy to the industry. coverage terms is expected to improve
ensure long-term profitability in the As of the latest reports, non-life insur- reinsurers' risk profiles and profitabil-
natural catastrophe business. ers had already received around 100 ity in the long term. This shift is not

16 October 2024 The Insurance Times