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7º Encontro de Resseguro do Rio de Janeiro - Daniel Hammer

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This document discusses the increasing impacts of climate change on agriculture in Latin America and the need for agricultural insurance. It notes recent droughts, floods, and fires affecting countries like Argentina, Peru, Chile, Brazil, Mexico, Colombia, Paraguay, and the Caribbean. Agricultural insurance programs exist in 18 of 25 Latin American countries but penetration is still low at around 24% of agriculture insured. Government support for insurance is crucial to expand coverage and subsidies for insurance are around $600 million annually, with Brazil and Mexico accounting for 90% of government spending. Climate change poses serious risks to agriculture going forward, making agricultural insurance an important risk management tool.

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1 Argentinean (and Uruguayan) Drought 2018, worst in 7 decades?
2 Argentinean (and Uruguayan) Drought
3 Peruvian Floods 2017 (Niño Costero!)
4 Peruvian Floods 2017
5 Chilean Forestry Fires 2017
6
20 January, 2015 7
CLIMATE CHANGE AND AGRO INSURANCE 7th Rio de Janeiro Reinsurance Meeting 11 April, 2018
9 Thanks very much to the organization for inviting Partner Re and myself to this prestigious conference. We appreciate the honor of participating.
10 People Affected by Natural Disasters Until 2017
11 Displaced People, year 2016
12 One Year Event (example 2013)
13 Historical events….increasing…
14 In a VERY CHANGING WORLD!
15 World Temperature IS changing (increasing!)
16 Sea Level is changing (increasing!)
• Increased ocean temperature • Acidification • Algae blooms and other sea specific that will affect the…WORLD • More frequent and intense droughts • Massive forestry fires • More intense and frequent rains (floods, landsliding) • Extreme weather (cold….and hot…..) • Perhaps more typhoons, hurricanes, monsoons? 17 What will happen?
18 Baaaa, nothing bad will happen to me!
19 But I will….really, I will disappear!
 Argentina  2008/09 and 2017/19  2012/13: Hail stroms never seen before in Marcos Juárez  Brasil  2012/13: Worse drough in 50 Years in Nordeste  Mexico  Feb/11: Cat frost with 800,000 has of Maíze lost  •Colombia  2010/11: Winter rain affecting 1.1 milo has . 115.000 cattle dead  Paraguay  2012 severe drouggh in soybean, 2013 severe frost in wheat  Peru and Ecuador  2017 severe niño costero  Caribbean hurricanes….what a disaster AND A BIG ETCETERA 20 Do we need agro insurance? Are you kidding me?
21 Do we need agro insurance? Are you kidding me?
22 Do we need agro insurance? Are you kidding me?
23 Do we need agro insurance? Are you kidding me?
• Agro insurance available in 18 /25 countries in LATAM •80 insurers and 15 reinsurers offer insurance/reinsurance •Mainly MPCI, named perils and indexed •Proportional reinsurance with stop loss of retention 24 Are we doing it?
• Premium volume of approx. US$ 1.3 Bio, 60% ceded to reinsurers •Brazil, Mexico and Argentina have 90% of premium •Growth was sustained until 2013 and then it has detained. •Risk is understood as insurable and has been promoted •Governments have understood its importance to stabilize both their budget and the stability of agro production and population 25 Are we doing it?
26 Agro Premiums
• Different mechanisms of support • Expense of government in subsidies to agro insurance is perhaps near US$ 600 MM • Brazil and Mexico represent 90% of governmental expense • Volume of premiums is directly related to governmental support 27 Government Support
• Still very low penetration and very uneven in the different countries -24% of agro is insured -19% of forestry is insured -1,3% of livestock -28% of aquaculture 28 Penetration
29 Agro Premium as a % of total
30 Agro Premium per Country
31 Loss Ratio and Technical result (%)
32 Share of agro insurance per country
33 Conclusions • It is a profitable business for insurance companies that do it properly (highly techincal) • Governmental Support is crucial to cover MPCI and its massification. legistlation, subsidies, administration costs and information are important issues for success • Climate change implies such a risk that it is difficult to consider growth without agro insruance • High technology in the fields will be crucial to defeat the difficulties of the future, relation with soffisticated companies helping might be key (Farmers Edge)
34 Thank you very much Daniel Hammer Daniel.Hammer@partnerre.com

More Related Content

7º Encontro de Resseguro do Rio de Janeiro - Daniel Hammer

  • 1. 1 Argentinean (and Uruguayan) Drought 2018, worst in 7 decades?
  • 3. 3 Peruvian Floods 2017 (Niño Costero!)
  • 6. 6
  • 8. CLIMATE CHANGE AND AGRO INSURANCE 7th Rio de Janeiro Reinsurance Meeting 11 April, 2018
  • 9. 9 Thanks very much to the organization for inviting Partner Re and myself to this prestigious conference. We appreciate the honor of participating.
  • 10. 10 People Affected by Natural Disasters Until 2017
  • 12. 12 One Year Event (example 2013)
  • 14. 14 In a VERY CHANGING WORLD!
  • 15. 15 World Temperature IS changing (increasing!)
  • 16. 16 Sea Level is changing (increasing!)
  • 17. • Increased ocean temperature • Acidification • Algae blooms and other sea specific that will affect the…WORLD • More frequent and intense droughts • Massive forestry fires • More intense and frequent rains (floods, landsliding) • Extreme weather (cold….and hot…..) • Perhaps more typhoons, hurricanes, monsoons? 17 What will happen?
  • 18. 18 Baaaa, nothing bad will happen to me!
  • 19. 19 But I will….really, I will disappear!
  • 20.  Argentina  2008/09 and 2017/19  2012/13: Hail stroms never seen before in Marcos Juárez  Brasil  2012/13: Worse drough in 50 Years in Nordeste  Mexico  Feb/11: Cat frost with 800,000 has of Maíze lost  •Colombia  2010/11: Winter rain affecting 1.1 milo has . 115.000 cattle dead  Paraguay  2012 severe drouggh in soybean, 2013 severe frost in wheat  Peru and Ecuador  2017 severe niño costero  Caribbean hurricanes….what a disaster AND A BIG ETCETERA 20 Do we need agro insurance? Are you kidding me?
  • 21. 21 Do we need agro insurance? Are you kidding me?
  • 22. 22 Do we need agro insurance? Are you kidding me?
  • 23. 23 Do we need agro insurance? Are you kidding me?
  • 24. • Agro insurance available in 18 /25 countries in LATAM •80 insurers and 15 reinsurers offer insurance/reinsurance •Mainly MPCI, named perils and indexed •Proportional reinsurance with stop loss of retention 24 Are we doing it?
  • 25. • Premium volume of approx. US$ 1.3 Bio, 60% ceded to reinsurers •Brazil, Mexico and Argentina have 90% of premium •Growth was sustained until 2013 and then it has detained. •Risk is understood as insurable and has been promoted •Governments have understood its importance to stabilize both their budget and the stability of agro production and population 25 Are we doing it?
  • 27. • Different mechanisms of support • Expense of government in subsidies to agro insurance is perhaps near US$ 600 MM • Brazil and Mexico represent 90% of governmental expense • Volume of premiums is directly related to governmental support 27 Government Support
  • 28. • Still very low penetration and very uneven in the different countries -24% of agro is insured -19% of forestry is insured -1,3% of livestock -28% of aquaculture 28 Penetration
  • 29. 29 Agro Premium as a % of total
  • 31. 31 Loss Ratio and Technical result (%)
  • 32. 32 Share of agro insurance per country
  • 33. 33 Conclusions • It is a profitable business for insurance companies that do it properly (highly techincal) • Governmental Support is crucial to cover MPCI and its massification. legistlation, subsidies, administration costs and information are important issues for success • Climate change implies such a risk that it is difficult to consider growth without agro insruance • High technology in the fields will be crucial to defeat the difficulties of the future, relation with soffisticated companies helping might be key (Farmers Edge)
  • 34. 34 Thank you very much Daniel Hammer Daniel.Hammer@partnerre.com