Are you a risk professional and feel passionately about a risk management issue or industry challenge? Do you want to share your views? Then get in contact and join us as we promote excellence in risk!"
Swiss Re Corporate Solutions seeks to cover business losses for Hong Kong firms after forced shutdowns in the wake of a typhoon warning.
Swiss Re Corporate Solutions has launched a typhoon warning coverage chiefly for the economic losses of businesses operating in Hong Kong.
Insur8 indemnifies local businesses against earnings volatility caused by forced shutdowns and additional operating costs stemming from a signal 8 or above typhoon warning issued by the Hong Kong Observatory.
Existing property and business interruption insurance products leave gaps in coverage and can result in substantial economic losses, claimed Swiss Re Corporate Solutions.
Dylan Bryant, CEO North Asia at Swiss Re Corporate Solutions, told StrategicRISK Asia that the local team has tried to take notice of the nuances of the local typhoon warning system and created “an innovation made in Hong Kong for Hong Kong”.
“It was the 100th anniversary of the typhoon warning system in Hong Kong, so it something that people in Hong Kong will be very familiar with,” said Bryant.
“Insur8 is aimed at indemnifying the loss of revenue, loss of profit and extra operating costs that take place for a business during a typhoon warning signal 8.”
Bryant explained that there are some distinctions to Hong Kong health and safety regulations and government statutes that requires businesses to protect employees and for people to be able to travel out prior to a potential typhoon hitting.
“That creates a unique situation where the typhoon warning system can be put out and businesses would need to send employees home, the stock exchange ceases, certain transportation needs to stop, including ferries, buses, taxis.
“Essentially the city goes into lockdown to prepare for the typhoon event,” said Bryant.
According to the Swiss Re Institute, the overall economic impact of a signal 8 type of typhoon warning on Hong Kong’s GDP is estimated at HK$4.29 billion (US$627 million) per day.
“The traditional property and casualty programs respond to the physical damage, the gap we are trying to plug here is that economic loss,” continued Bryant.
“Most businesses will be impacted in some way, that might be forced closure, having to send your employees home, the inability to trade or transact business.”
Bryant said that the product has a simple trigger point around when the signal 8 warning is issued by the Hong Kong Observatory.
“These warning can be very frequent and there have been years where there have been multiple such warnings,” said Bryant.
“This is unique to Hong Kong – we understood the problem before we understood the product.”
Bryant said Swiss Re Corporate Solutions knew there was an impact on GDP from these warnings, so it wanted to translate that into a “simple insurance product.”
“We have spoken to risk managers about this, key risk managers were invited to our launch event and we have set-up further one-on-one meetings with risk managers,” he said.
Bryant said that he believes this approach of building bespoke solutions in a country for risks in that territory that have been uninsured is going to be a cornerstone of the industry going forward.
“There is going to be typhoon exposure in several geographies, for example we think Macau might be equally important for a solution like this, particularly with the leisure and hospitality industries being so large there,” added Bryant.
No comments yet