Insurance industry handles natural disasters well - Aon Global
'Black swan' catastrophes are occurring more frequently around the globe, but the Australian insurance industry has coped well, according to Aon Global Risk Consulting (Aon Global).
Increasingly, events which are commonly considered high-impact and difficult to predict, are now considered more common than ever before, said Aon Global chief executive officer Stephen Cross.
Speaking at Aon Global's Advanced Risk Finance Conference in Melbourne yesterday, Aon Risk Solutions (Aon) national general manager, corporate risk services Paul Venning said the high number of natural disasters in Australia and New Zealand over such a short space of time had forced global insurers to consider the serious natural catastrophe exposures our region presents.
"There is a perception that some of those perils, in particular the New Zealand earthquakes, have been underpriced in the past," Venning said.
"We have a strong prudential regime around capital adequacy to ensure that insurance companies have the ability to pay claim, so I think we're in very good shape," he said.
Despite the reduction in capacity, the Australian insurance market has managed to cope well with these disasters thanks to a strong mixture of local and global capital across the industry. The concentration of risk exposure combined with a concentration on catastrophes has also presented global carriers with the opportunity to invest in Australian insurance markets, Cross said.
Cross also said there had been an increase in companies taking a more holistic view of risk as clients increase their awareness of catastrophes and the "interdependency" of such risks.
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