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The China floods are estimated to have caused US$10-12 billion in economic losses, while flood-related economic losses in India and Pakistan have exceeded US$1 billion.

“These examples highlight the impact this peril can have in the region from an economic loss perspective whilst insurance penetration remains relatively low,” Pidcock said.

Besides, demand for data related to historically peak perils of typhoon and earthquakes also continue to rise, driven by an active typhoon season in the Philippines, Hong Kong, and Vietnam, alongside the devastating earthquake in Myanmar, according to Pidcock.

“Such events are a reminder of the devastation that earthquakes and typhoons can cause especially in territories with limited availability of insurance industry exposure and loss data and cat models,” he added.

Data landscape

Perils has focused on working with primary carriers in Australia, Japan and New Zealand to produce industry exposure and loss data.

“Our experience shows that the data is of a consistently high standard with strong support from our primary insurance partners,” said Pidcock, adding that Perils’ market penetration in each of these respective markets is more than 80% of the primary carrier market shares.

“In other parts of the region, there is still some way to go to gain similar support from the primary market to share exposure and loss data.

“In our experience this is often driven by data quality concerns which gradually are improving in many markets.”

To address these concerns, Perils has been developing exposure data for Indonesia, Philippines and Thailand since 2021 with the support from reinsurers, modelling vendors, brokers and associations, according to Pidcock.

“For these markets, we took a slightly different approach to work with industry stakeholders to produce a ‘Consensus Industry Exposure Database’. This provides in effect a best estimate of industry exposures to support model development in these markets,” he said.

“Our goal remains to work with other primary markets in the region albeit we appreciate this may still take time.”

ILS

As exposures continue to grow in APAC, Perils believes that ILS will continue to play a role amongst other alternative capital instruments, said Pidcock.

“There has been an increase in the use of ILS in the APAC region in recent years. From Perils’ perspective, ILS is one of several alternative capital tools available to manage natural catastrophe exposure,” he added.

Since 2016, Perils has been actively used as a reporting agent in numerous ILS and industry loss warranty (ILW) transactions which included Japan, Australia and New Zealand perils.

“Industry loss indices are best suited for reinsurers buying retrocession using such instruments as ILS and ILWs. From a basis risk perspective, Perils loss indices are a better fit with reinsurers who will write a portfolio across the market, hence the Perils indices can reduce basis risk,” Pidcock said.

“It is critical reinsurers can access different forms of retrocession including ILS/ILWs to help facilitate capacity into the respective markets.”

Regional coverage

Having been present in the APAC region for nearly 10 years, Perils currently covers the whole APAC region using a combination of its core and extended reporting services.

The core service uses a ‘ground up methodology’ relying on insurance partners for exposure and loss data, recently covering Japan, Australia, and New Zealand.

Meanwhile, the extended service, which were launched earlier this year, reports cat losses exceeding US$1 billion globally, except the US.

“Our expansion plans either by market or peril are driven by the level of insurance industry demand as we fully rely upon market feedback,” he said

“We are regularly asked about China and India and will continue to engage with the industry to assess whether we expand our core service into either of these markets.”

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