Briefing Discusses Managing Secondary Perils in Asia Pacific

Secondary perils represent a unique challenge to the (re)insurance industry. There have been sizeable individual losses from these secondary perils, as a number of smaller loss events across a year can add up quickly. While purported secondary perils caused significant losses at a global level, the secondary-peril losses for the Asia Pacific region (APAC) were less severe than those in Europe and North America. The briefing Managing ‘Secondary’ Perils in Asia Pacific offers details on the impact of these events, their influencing factors, and advice on how to manage the risk.

The designation of these perils is regionally specific. In APAC, what may be a secondary peril may, in other territories, often be considered a core focus, and vice versa. For instance, floods that occur in Malaysia or Thailand may be prioritized by insurers and reinsurers. However, in 2021, floods across Central Europe led to significantly higher losses than expected, yet were considered secondary-peril events.

In the last decade, secondary peril losses in APAC have trended, as a percentage of total losses, lower (40%) than the percentage in other regions (global average of 60% of total losses, or global average excluding APAC of 63% of total losses). Nonetheless, the region has experienced a number of historic secondary-peril losses, including tsunamis in 2004 and 2011, major floods in India in 2005 and 2018 and in Thailand in 2011, and floods and bushfires in Australia in 2011 and 2019-20.

Through the creation of innovative and tailored solutions derived from a comprehensive and integrated risk-management approach, (re)insurers can overcome the challenges posed by secondary perils to help achieve long-term growth and profitability. For example, Guy Carpenter has invested heavily in our G-CAT® fully correlated models that cover the APAC region, so model events can be viewed through multiple territories rather than through individual countries.