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Synopsis
Timetric’s ‘Insight Report: Insuring Against Natural and Man-Made Catastrophe’ analyzes the market for natural and man-made catastrophe insurance, in the midst of increasing frequency and severity of catastrophic incidents.

The catastrophe insurance market is more prevalent in developed countries, as most of the insured loss emanates from developed regions, particularly the US. This is due to a higher rate of catastrophe insurance penetration into these markets compared to developing regions. Higher property values and greater accumulation of insured assets in areas exposed to catastrophes, contribute to substantial insured loss in developed regions. However, the most economic loss due to natural catastrophes emanates from developing economies due to underinsurance of catastrophe risk. Part of this is due to relatively immature nature of insurance markets in developing markets, meaning lack of catastrophe insurance availability.

Multilateral institutions, such as the World Bank, are playing a significant role in building the market for catastrophe insurance in developing economies, which tend to lack the expertise to understand and insure complex risks attached to natural and man-made catastrophes. Multilateral institutions can empower governments and insurers to offer catastrophe insurance by providing both capital and expertise.

The report also discusses in detail the efforts made by insurers and governments to fill the insurance 'gap' between economic and insured losses, signifying global opportunities for the insurance industry. Insurers, government and multilateral organizations are making a concerted effort to confront challenges in the catastrophe insurance market through a process of product innovation and deployment of new technologies.

Summary
Timetric’s ‘Insight Report: Insuring Against Natural and Man-Made Catastrophes’ provides detailed analysis of insuring natural and man-made catastrophes. It provides:

- Insights into the key market trends in natural and man-made catastrophe insurance.

- Analysis of the causes behind high economic and insured losses, and the rising insurance gap in catastrophe insurance market.

- An overview of the nature of natural and man-made risk. It focuses on man-made catastrophes such as cyber risk and terrorist attacks.

- Detailed understanding of catastrophe bonds as an alternative platform to transfer risk to the capital market.

Scope
- Build insights on business opportunities for insurers to provide catastrophe insurance, as the insurance 'gap' increases.

- Analyze the growth of the catastrophe bond market and its acceptance as a mainstream financial instrument.

- Analyze the rationale behind government participation in catastrophe insurance, and the repercussions of offering catastrophe cover at heavily subsidized premiums.

- Understand the contribution of multilateral institutions to the development of catastrophe insurance using sustainable business models.

Reasons To Buy
- Develop insights into the current developments in the catastrophe insurance market.

- Gain an understanding of the scale of economic and insured losses due to natural and man-made catastrophes.

- Gain insights into how initiatives taken by insurers, government and multilateral institutions, are contributing to the development of catastrophe insurance.

- Understand the use of catastrophe bonds as an alternative source of capital, reducing insurers' dependence on traditional reinsurance.

Key Highlights
- Most economic and insured losses in catastrophe insurance are attributed to natural catastrophes such as earthquakes, hurricanes and storms, which are classified as primary perils and contribute more to catastrophe loss than secondary perils such as floods, landslides, hailstorms and tornadoes. On average, only 14% of man-made disasters accounted for insured losses during 2009–2014. However, man-made disasters such as cyber risks and terrorist attacks have the potential to cause significant catastrophic losses in future.

- Natural disasters, such as earthquakes, hurricanes and winter storms, have the potential to cause colossal damage to life and property. They are defined as primary perils due to substantial economic losses they can cause. Primary perils contribute more to the total natural catastrophe losses at a global level than secondary perils. However, factors can differ at regional or country level. Secondary perils such as flood, landslides, hailstorms and tornadoes can also result in high catastrophic losses, as these are higher-frequency events, with severity varying by specific region.

- Asia is much more vulnerable to natural catastrophes than other regions and has accounted for 40% of all the world’s disasters in the past decade. High population densities in low-sea-level areas and lengthy coastlines make the region vulnerable – particularly Southeast Asia. In total, 56% of the 100 cities most exposed to natural disasters are in Asia, according to risk analysis firm Verisk Maplecroft.

- The market for catastrophe bonds has reduced insurers’ dependence on traditional reinsurance capital. It has also enabled insurers to build capacity to underwrite high risks associated with natural catastrophes. Catastrophe bonds reduce the reserve requirement to be maintained by the insurer, and increase insurance protection with negligible credit risk.

Table Of Contents

Insight Report: Insuring Against Natural and Man-Made Catastrophes
Table of Contents
1 Executive Summary
2 Emerging Dynamics of Catastrophe Insurance
3 Trends in Natural Catastrophes
4 Trends in Man-Made Catastrophes
5 Roles of the Government and Multilateral Organizations
5.1 The Turkish Catastrophe Insurance Pool - Mandatory Insurance to Increase Catastrophe Coverage
5.2 TRIA (US) - Enabling the Insurance Industry to Provide Terrorism Cover
6 The Catastrophe Bond Market
7 Bridging the Gap in Catastrophe Insurance
8 Appendix
8.1 Methodology
8.2 Contact Timetric
8.3 About Timetric
8.4 Timetric's Services
8.5 Disclaimer

List of Tables
Table 1: Mandatory Natural Catastrophe Insurance Programs
Table 2: Major Natural Catastrophes - Insured Property Losses
Table 3: Most Costly Earthquakes Globally (1980-2014)
Table 4: Government Terrorism Insurance Programs
Table 5: Major Catastrophe Bond Transactions, 2014

List of Figures
Figure 1: Global Catastrophe Losses (2009-2014)
Figure 2: Types of Natural Catastrophe (1993-2012)
Figure 3: Natural Catastrophes - Frequency and Economic Losses (2010-2014)
Figure 4: Natural Catastrophes - Insured and Uninsured Losses (2010-2014)
Figure 5: Global Economic Losses - Man-Made Catastrophes (2010-2014)
Figure 6: Global Insured Losses - Man-Made Catastrophes
Figure 7: Rationale for Government Intervention in Catastrophe Insurance
Figure 8: Forms of Government Intervention in Catastrophe Insurance
Figure 9: Structure of Catastrophe Bonds
Figure 10: Transition of Catastrophe Bonds to the Mainstream Market
Figure 11: Catastrophe Bonds Issues and Risk Outstanding (2006-2014)
Figure 12: Challenges in Catastrophe Bonds Market

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