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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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“The insurance industry needs to better understand the impact of the severity and frequency of cat events, factoring in things such as climate change impacts.

“As insurance penetration grows, and development becomes more concentrated in certain regions, greater granularity and more timely data is needed for exposures (insured values) and vulnerabilities,” Pidcock said.

A recent analysis conducted by Perils focused on Queensland hailstorms, plotting hail size against damage degrees and identifying how each event can vary from a vulnerability perspective. One key finding revealed that regulatory requirements for cyclone-resilient roofing significantly increased insured claims following a hailstorm. This highlights the critical importance of high-resolution exposure and loss data in understanding regional vulnerabilities.

Pidcock noted that the insurance industry is presented with opportunities to collaborate with key stakeholders and become more innovative with how it manages data.

“There are examples of the industry already using AI as a tool for data management but arguably is still in its exploratory stage.

“The insurance industry needs to source various datasets including relating to climate change influences, exposure and vulnerability data whilst becoming more innovative in how it sources and uses this data.” Darryl Pidcock, Perils

“From Peril’s perspective, the focus is to continue expanding our reporting of industry exposures and losses in close collaboration with the industry but also enhancing the datasets and tools available to support the industry better understand risk exposures and vulnerabilities in a timelier manner,” he said.

The urgency for robust data is particularly pronounced in fast-developing countries across Asia, where the economic landscape is rapidly changing, according to Pidcock. Areas in Southeast Asia and India are experiencing significant growth driven by manufacturing and infrastructure development, yet insurance penetration remains relatively low.

“As an example, year to date from an economic loss perspective there are three Asia cat events in the global top ten, these being China summer floods, Typhoon Yagi and the Noto Peninsula Earthquake in Japan.

“Whilst economic losses are currently estimated at approximately US$50 billion from these events, insured losses to date are estimated at only US$5 billion.”

As insurance penetration grows over time, there is a need to better understand the insured exposures and vulnerabilities in these regions.

“Whilst we know typhoons and earthquakes often have a devastating impact, the increasing frequency of flood and storm-related events needs to arguably be better understood.”

Besides, with urbanisation creating more concentration of exposures and manufacturing development concentrated in many Cat-exposed regions, timely and reliable data becomes even more critical to support development of Cat models.

“The insurance industry needs to source various datasets including relating to climate change influences, exposure and vulnerability data whilst becoming more innovative in how it sources and uses this data,” said Pidcock.

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