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Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
2 2007 / Santiago
de Chile
Introduction / Introducción / Introdução
Señoras y señores,
Disculpen que mi presentación sea en inglés. Mis escasos conocimientos de español y portugués solo me permiten decirles que pueden sentirse dichosos de que me esté limitando a esta sola página.
¡Muchas gracias!
Estimados senhoras e senhores,
Peço desculpa por proferir a minha conferência somente em língua inglesa, mas os meus escassos conhecimentos das línguas portuguesa e espanhola são apenas suficientes para lhes comunicar que se podem considerar felizes que agora acabo por continuar a falar apenas em língua inglesa.
Muito obrigado!
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
3 2007 / Santiago
de Chile
Today‘s schedule on IAIS and reinsurance
Index of contents
A) During PANEL (now)
Some background on:
– Current IAIS reinsurance work
– Selected Latin American data
B) During CASE STUDY (later)
Some basic insights:
– Reinsurance supervision
– Problems and solutions
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
4 2007 / Santiago
de Chile
Importance of the IAIS
IAIS Mandate
• Standards and guidance for insurance supervision
• Assist national supervisors
• Promote cooperation among insurance supervisors
• Coordinate with other financial sector and international organizations (Basel Committee, IOSCO, Joint Forum, Financial Stability Forum, etc.)
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
5 2007 / Santiago
de Chile
Reinsurance and the IAIS Executive
Committee
Technical
Committee
Solvency
Subcommittee
Accounting
Subcommittee (incl.
Insurance
Contracts)
Reinsurance
Subcommittee
Governance &
Compliance
Subcommittee
Market Conduct
Subcommittee
Financial
Conglomerate
Subcommittee
Reinsurance
Transparency
Subgroup
Mutual Recognition
Subgroup
Pension
Coordination Task
Force
ICP ReviewTask
Force
Executive Committee
Technical Committee
Reinsurance Subcommittee
Reinsurance Transparency Subgroup
Mutual Recognition Subgroup
Reinsurance Subcommittee
1. Main focus on
Mutual Recognition
Reinsurance Transparency
2. Work also on
Revision of IAIS Papers
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
6 2007 / Santiago
de Chile
Reinsurance Transparency Subgroup
Global Reinsurance Market Report
• Participants of report
– Supervisors from Bermuda, France, Germany, Japan Switzerland, the UK and the USA
– 56 significant reinsurance entities
– Representing a very high proportion of the worldwide reinsurance market
• Aim of report
– Increase transparency concerning worldwide reinsurance market
– Indicate resiliency of the reinsurance market
Source of information for supervisors around the world
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
7 2007 / Santiago
de Chile
IAIS Global Reinsurance Market Report
Edition 2007 – new structure & new layout
Insights to relevant reinsurance market developments
New in the report: more reference to the overall capital market
Example:
Average CDS spreads for reinsurance, insurance and banks
0
10
20
30
40
50
60
Jan-
06
Apr
-06
Jul-06
Oct
-06
Jan-
07
Apr
-07
Jul-07
Oct
-07
Banks
Insurance
Reinsurance
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
8 2007 / Santiago
de Chile
IAIS Global Reinsurance Market Report …
… Edition 2007 – some life reinsurance focus …
…“Chapter III” provides assessments on:
a) pandemic risks b) mortality risks
e.g. potential avian flu e.g. graph below
http://www.iaisweb.org/
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
9 2007 / Santiago
de Chile
Mutual Recognition Subgroup
Mutual Recognition of Reinsurance Supersvision
• Reinsurance protection
– Important risk mitigation tool for insurers
– Provide economic benefits for primary insurers and their
policyholders
Example: major natural catastrophes
(e.g. severe storms)
- Reinsurance provides protection
- Global risk diversification is important
Supervisors should support, if
possible and appropriate, a worldwide
diversification of reinsured risks
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
10 2007 / Santiago
de Chile
Mutual Recognition Subgroup
IAIS aim concerning mutual recognition
• To facilitate a system of efficient insurance and reinsurance
supervision: avoid unnecessary burdens
Example: appropriate information sharing among supervisors
instead of a duplication of supervisory requests
• Please check IAIS website for the recently published
“Discussion Paper on the Mutual Recognition of Reinsurance Supervision”
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
11 2007 / Santiago
de Chile
Reinsurance Subcommittee
Additional work planned for the near future
• Revision and updating of existing reinsurance
related IAIS papers
– „Standard on the evaluation of the reinsurance cover of
primary insurers“
– „Guidance Paper on finite reinsurance“
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
12 2007 / Santiago
de Chile
Insurance and Reinsurance
Some insights into Latin America
• Premium shares
• Premium growth
• Market penetration
• Growth expectation
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
13 2007 / Santiago
de Chile
Latin America
Non Life premium shares Latin America NL Premium shares* within LA (2005)
37.8%21.4%
9.2%9.1%
5.6%4.5%
1.5%1.5%1.4%
1.0%1.0%0.8%0.8%0.7%0.7%0.7%0.6%0.6%0.4%0.3%0.2%0.2%
0% 5% 10% 15% 20% 25% 30% 35% 40%
BrazilMexico
VenezuelaArgentinaColombia
ChileEcuador
PeruDominican Republic
JamaicaCosta Rica
PanamaGuatemala
UruguayTrinidad and Tobago
El SalvadorBahamasBarbadosHonduras
BoliviaNicaraguaParaguay
87.6%
87.6%
Source: VERA
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
14 2007 / Santiago
de Chile
Latin America
Non Life premium growth 2000-2005
NL real premium growth 2000-2005*
12.5%
12.3%
6.5%
5.4%
4.9%
4.4%
3.9%
2.3%
0% 5% 10% 15%
Venezuela
Chile
Mexico
Argentina
Latin America
World
Colombia
Brazil
Source: Munich Re
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
15 2007 / Santiago
de Chile
Latin America
Insurance market penetration
Venezuela
UK
Singapore
Russia
Philippines
Mexico
S. Korea
Italy
Germany
France
Colombia
China
Chile
Canada
Argentina
USA
TaiwanSouth Africa
Norway
New ZealandJapan
India
Brazil
Australia
0
1
2
3
4
5
6
0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000
GNI per capita in purchasing power parities (PPP-US$)
Pe
ne
tra
tio
n N
on
-lif
e (
%)
Global trend line
year: 2005 Source: VERA
Case Study Reinsurance Scenarios
Dr. Sebastian von Dahlen, Principal Administrator IAIS
16 2007 / Santiago
de Chile
Chile
Growth expectation for a primary insurance market
source: AACH (history), Munich Re
0
500000
1000000
1500000
2000000
2500000
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
NL Trend BIP nom. (downside) NL Trend (GNI PPP)
Global Trend NL