The global catastrophe insurance market was valued at around $55 billion in 2015 and is expected to surpass $72 billion by 2020, says Technavio.
Technavio has announced its latest market research report on catastrophe insurance to its new research areas portfolio. This market analysis discusses the major drivers and key emerging trends that will influence the growth of the global catastrophe insurance market during the forecast period 2016-2020. Some of the top vendors listed in this industry analysis include AIG, Allianz, AXA, Berkshire Hathaway, and Lloyds.
In terms of geographical analysis, the Americas will be the largest region in the global market, reaching revenues of more than $47 billion by 2020. The US will emerge as the key revenue generator in the region.
“Various insurance companies are using big data analytics to design catastrophe policies, which helps in integrating the historical data, policy conditions, exposure data, and reinsurance information. These solutions help companies to design and update their pricing models on a real time basis. These solutions ensure smooth integration of data mining tools with organizational resources and helps reduce operational costs. It provides predictive analysis that help evaluate the trade-off between different strategies and tactics,” says Amit Sharma, a lead analyst at Technavio.
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The new industry research report from Technavio analyzes some of the key drivers and trends responsible for the growth of this market and its sub-segments.
Catastrophe bond pricing and valuation strategies
The insurance companies are offering different policies at different price ranges to help the insurers earn positive yields and generate cash flows. The portfolio managers are allocating capital in different strategies by understanding the attributes of pricing trends and offering catastrophe bonds that help the investors to earn good returns. The insurance company makes use of catastrophe bonds so that it can transfer insurance risk to the capital markets as they provide alternative means to capitalize reinsurance transactions. Catastrophe bonds provide higher yields on a diversified asset class as they are traded on a secondary market and the trading of these bonds involves fixed income securities, such as duration, discount margin and yield to maturity. These bonds also provide a real-time transparency regarding risk pricing in broader markets.
Regulatory support for public-private cooperation on building resilient infrastructure and better risk governance
The government bodies are developing a comprehensive framework for disaster management that helps them mitigate the losses incurred during any natural disasters. The government has designed various disaster management frameworks, and one of the most popular one is the PPP model. In the PPP model, the government partners with private sector vendors to strengthen the infrastructure by increasing the quality of services offered and providing better value for money. PPP is considered as a strategic approach to minimize the negative impacts of disasters, particularly in the developing countries. The government organizations are collaborating with several private agencies to finance natural disaster management projects by using financial tools like insurance and catastrophe bonds. Various established insurance companies are investing in the design and development of innovative products, distribution, and service strategies.
Climatic changes
Climate change has brought in extreme weather events both natural, and manmade disasters and insurance companies are focusing on understanding the change in the frequency of the extreme weather condition. The insurance companies, reinsurance companies, capital markets, and governments are making use of various catastrophe modeling technologies to understand the occurrence of these events and design policies accordingly. This technique helps them understand the risk selection process, underwriting the process, risk mitigation strategies, portfolio optimization, risk transfer mechanisms, reinsurance decision-making, portfolio pricing, reserving and rate making, capital setting and exposure and aggregate management. Correct framework and accurate modeling techniques adopted by insurance companies will help in the growth of the market during the forecast period.
Other prominent vendors identified in this report are Allstate, Aviva, Liberty Mutual, and Zurich Insurance Group.
This research report includes an in-depth analysis and market shares and sizes of the sub-segments and geography. It provides a comprehensive analysis of the key companies, including their market shares, business overview, key financials, etc. The market study also offers a detailed analysis of key drivers, challenges, and opportunities influencing this market.
A more detailed analysis is available in the Technavio report titled, ‘Global Catastrophe Insurance Market 2016-2020’. Technavio also customizes reports by other regions and specific segments upon request.
Other related reports:
- Global Reinsurance Market 2015-2019
- Global Property Insurance Market 2016-2020
- Global Insurance Brokerage Market 2016-2020
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