“There are a couple of things that are coming together here in Australia to make for a really good conference,” said David Whitehead (pictured above), president of the US headquartered Weather Risk Management Association (WRMA). “Firstly, you guys have terrible weather.”
According to its website, the WRMA’s mission is to enhance public understanding of weather risks, promote their management and provide a platform for market participants to grow the industry. The group has an insurance industry focus and represents members “from all sides of the weather market” including brokers, insurers and reinsurers.
Insurance Business was invited to the WRMA’s Asia-Pacific 2023 conference in Sydney this week.
Whitehead, a meteorologist, opened the event by saying that local weather produces just about every challenge. Another significant observation for the insurance industry: He said Australia is now akin to a testing ground for parametric insurance products.
“What that means for you is that weather risk management is not some metaphysical discussion, it’s a reality,” said Whitehead. “It’s something that you deal with on a daily basis and better yet, it’s something you’re forced to deal with.”
He said, as a result, there’s “a lot of uptake” of parametric products.
“You look at the economy, you look around the room: Energy, ag, nat cat, construction, tourism - everyone’s using these products for you,” he said. “These are no longer exotic products per se, these are some of your everyday risk management tools.”
Some of those in the room included local parametric experts like Sydney-based Arun Mehta, senior structurer from Swiss Re Corporate Solutions. Mehta explained how parametric insurance helped get a major hydropower project in Nepal back on track following that country’s 2015 earthquake. He suggested this parametric funding model could be applied more widely in the construction industry.
Ben Qin, also Sydney-based and head of North Asia and Australia for Descartes Underwriting, discussed how a parametric offering can insure forestry plantations used for carbon offset projects.
A sugarcane parametric case study, meanwhile, was presented by Brisbane-based Bill Hardie from Liberty International Markets and WTW’s London-based Julian Roberts.
Insurance Business TV recently interviewed another sugarcane parametric expert: Karen Hardy. Hardy’s Redicova offering is being taken up by sugarcane and banana growers in northern Queensland to protect their crops from cyclones.
Whitehead underscored that “now” is a pivotal time for the weather risks market.
“There’s an old adage: People say the key to success is being at the right place in the right time,” he said. “I think that now is that time for this market.”
More than ever before, climate change and weather risks are a major concern for governments, businesses and people.
The 2023 Global Risks Report by the World Economic Forum (WEF), Marsh McLennan and Zurich Insurance Group, shows that, according to thousands of executives from more than 100 countries, climate related threats are the dominant risks over the next 10 years.
“More specifically, climate and nature related risks lead the top 10 risks, by severity, that are expected to manifest over the next decade,” said the report.
The report’s Global Risks Perceptions Survey (GRPS) said “Failure to mitigate climate change and failure of climate-change adaptation top the rankings as the most severe risks on a global scale.”
Whitehead and other stakeholders at the WRMA conference - like the Bureau of Meteorology’s (BoM) Dr David Jones - made it very clear just how vulnerable Australia is to climate risks.
“I’m not making light of it but it’s pretty wild out there, right?” said Whitehead, a native of Charleston, South Carolina, as he recalled the WRMA’s last conference here, in Melbourne three years ago.
“You were coming off a horrific bushfire season and since then you’ve had epic flooding, severe weather and cyclones,” he said.
There were other reasons to remember the Melbourne conference. It was March 2020 and Australia was about to close its international borders because of the spreading COVID-19 pandemic.
Whitehead conjured images of the end of the Vietnam war and that 1975 video footage of a helicopter’s last evacuation from the rooftop of the US embassy in Saigon.
“We can laugh a little bit now,” said Whitehead. “Literally, as we were wrapping up that event, people were running for the doors to catch the last flights, it was pretty stressful and a bit unpleasant.”
In contrast, the 2023 conference was under no such pressures. The event included a three hour evening networking reception at The Cabana Bar in Martin Place.
Among WRMA’s members based in Australia, or with a strong presence locally, are Aon, Chubb, Clyde & Co, Descartes Underwriting, Munich Re, Steadfast, Swiss Re and WTW.
Did you attend the WRMA event? What did you think? Please comment below.