Your Partner in Building Catastrophe and Weather Risk Markets

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1 Your Partner in Building Catastrophe and Weather Risk Markets Building Resilience to Disasters in Western Balkans and Turkey

2 Natural Catastrophe Risk Exposure Natural Disasters can strike anyone, anywhere and at any time without any warning. In Southeast Europe (SEE), earthquakes, floods or extreme weather events frequently inflict severe damages to homeowners, businesses and farmers. Over the last century, numerous strong earthquakes have struck this region. The Macedonian earthquake of July 26, 1963 caused disastrous consequences, leaving over 130,000 people homeless and destroying the city of Skopje. In Albania, the 1979 Shkoder earthquake of 6.9 magnitude left over 100,000 people homeless. The 2010 earthquake in Kraljevo of 5.5 magnitude affected around 120,000 people. Major floods have also been a recurrent problem. In September 2002, floods in the northern and southern parts of Albania damaged 494 houses, destroyed 30,000 hectares of agricultural land and affected 16,971 families. In 2013, hundreds of homes were flooded and over 20,000 people were affected in FYR of Macedonia when the banks of ten major rivers burst after two days of heavy rain. In the last 60 years, flooding in Serbia has caused material damage estimated at more than EUR 8 billion. In May 2014, catastrophic floods heavily affected Serbia and Bosnia causing devastating economic losses estimated at around EUR billion in each country. Europa Reinsurance Facility Ltd. Catastrophe and Weather Risk Reinsurance Company for Southeast Europe Yet, insurance coverage for natural hazards is almost non-existent among homeowners and small and mid-size enterprises (SMEs). Currently, only 1-2 houses out of 100 have private catastrophe insurance coverage, and as a result, in case of a major natural disaster most families, SMEs and farmers have to rely on government help.

3 About Europa Re To address the problem of low catastrophe insurance penetration in SEE, the countries of the region, supported by the World Bank, the Swiss Economic Cooperation Organization (SECO), the Global Environment Facility (GEF), UNISDR, and EU have established Europa Reinsurance Facility Ltd. (Europa Re). Europa Re is a Swiss-based specialty property catastrophe reinsurance company that manages an innovative catastrophe insurance market development programme for SEE. The company was established as a public-private partnership by the governments of Albania, FYR of Macedonia and Serbia. Europa Re is headquartered in Zug, Switzerland, and is regulated by the Swiss Financial Market Supervisory Authority (FINMA). Europa Re s Vision is to increase the catastrophe insurance penetration among homeowners and SMEs. Europa Re s Mission is to: Provide reinsurance and know-how to Europa Re insurance partners to enable them to expand sales of catastrophe and weather risk insurance products; Educate consumers and businesses about their risk exposure to weather and catastrophe risks; Help governments and insurance regulators enact regulatory and policy reforms conducive to the development of catastrophe and weather risk insurance markets. Europa Re offers reinsurance support to participating local insurance companies for innovative earthquake, flood and agriculture risk insurance products endorsed by the company. As part of the programme, participating insurers receive access to a fully integrated web-based insurance platform - comprising risk-model driven pricing, underwriting, claims management and risk management tools. Europa Re s main objective is to provide participating insurers with proper reinsurance, know-how and insurance technologies that would enable them to enter or expand their presence in catastrophe and weather risk insurance product lines.

4 New Generation of Insurance Solutions at a Glance Reliable Catastrophe and Weather Insurance Products: To ensure the high credit quality of catastrophe insurance products supported by Europa Re through its reinsurance coverage, the company provides its partner insurers with the level of reinsurance protection compliant with the rigorous risk-based solvency standards set out by FINMA the Swiss Financial Market Supervisory Authority. Europa Re endorsed catastrophe and weather risk products are designed to encourage massive participation of the public in Europa Re s programme. The products can be further custom-tailored to meet the needs and budget of individual homeowners, SMEs and farmers. Expertise and Know-How: Europa Re endorsed earthquake, flood and agricultural insurance products are sold and serviced exclusively through accredited and fully trained local partner insurance companies that meet the minimum risk management and product support requirements set out by the programme. Actuarially Sound Premium Rates: Sound and reliable pricing of Europa Re-endorsed insurance products is based on high-resolution catastrophe-risk models exclusively designed for the local markets. Claims Management: The Programme utilizes an efficient, quick and reliable claims servicing system under the catastrophe insurance product lines that relies on innovative imagebased technology. This system guarantees that insurance claims will be assessed and settled in accordance with the Swiss quality standards. A unique imagebased claims settlement technology developed for Europa Re programme and administered by a dedicated and highly trained team of claim management professionals ensures a swift and timely settlement of insurance claims following even the most devastating natural disasters. Claims settlement under the agriculture insurance product line is conducted automatically based on a predetermined average index value. Dedicated Reinsurance Capacity: Europa Re fully reinsures on highly competitive terms all catastrophe risk arising from sales of the earthquake, flood and agricultural insurance products sold by its partner local insurance companies - subject to their continuing compliance with the local regulatory requirements and the programme s minimum accreditation requirements. Notes: *The insurance products and insurance services endorsed by Europa Re are provided by its partner company Europa Re Management Ltd. a specialized Swiss based insurance services provider. *The high resolution catastrophe risk models for FYR of Macedonia, Serbia and Albania were developed by AIR Worldwide a specialized risk modelling company.

5 Benefits of Country Membership in Europa Re Member Countries benefit from their membership in Europa Re through: Expanded private catastrophe and weather risk insurance coverage of homeowners, SMEs and farmers; Reduction in overall fiscal exposure to natural disasters; Development of local catastrophe insurance markets through the creation of country-specific risk models, regulations, pricing and actuarial guidelines and new products; Coverage of government assets and insurance coverage of government obligations to socially vulnerable segments of the population exposed to natural disasters; Reduction of systemic risk for the financial sector, particularly in earthquake-prone countries, as the collateral of banks and the solvency of insurance companies will be protected; Improved quality of insurance supervision through assistance in developing risk-based insurance regulations for catastrophe risk. Benefits for the Insurance Industry Europa Re endorsed catastrophe and weather risk insurance products and the supporting IT systems are backed by the state-of-the-art catastrophe risk insurance modelling - the first of its kind developed for the region, automated risk pricing and underwriting tools. The value proposition of Europa Re risk models is anchored in the world-class expertise and global research in catastrophe risk modelling by the AIR Worldwide, country specific risk data painstakingly collected from SEE governments, research organizations and unique business applications developed by Europa Re experts. These innovative insurance technologies are made available to local insurance companies that enter Europa Re programme upon successful completion of comprehensive training of their staff on Europa Re endorsed products and web-based insurance production platform. The high quality of catastrophe insurance products, developed under Europa Re programme, is guaranteed by the provision of adequate reinsurance capacity and comprehensive claims management. Operating as a regional aggregator of catastrophe risk and being well equipped with the modern risk modelling tools, Europa Re offers highly competitive reinsurance terms to its partner insurance companies.

6 Disaster Risk Education and Advice In addition to providing marketing and PR support for its partner insurance companies, Europa Re developed and maintains a unique catastrophe risk monitoring website CATMonitor, which helps homeowners, businesses and governments to better prepare for natural disasters. CATMonitor is a highly interactive and innovative tool developed exclusively for public education purposes which greatly extends public access to information about natural disaster risks. In only a few minutes, site-users can learn about the exposure of their properties and businesses to catastrophe risk and the risk mitigation measures that may be undertaken to reduce the risk. Europa Re s CATMonitor is a free online information portal offering: Catastrophe risk assessment tool for properties and businesses; Assessment of users property catastrophe insurance needs, based on location, age and construction type of the property; Subscription to disaster alerts; Access to a learning tool about hazards in the area through the visualization of hazard data; Ability to report on and learn about the safety and seismic resilience of schools and hospitals in the communities. Planners, local government officials, agencies and engineers can use the maps and data in CATMonitor to respond in case of a natural disaster, as well as to determine where and how to build new structures. Homeowners and businesses can use the maps and data to learn about their property risk exposure and take timely action to prevent or mitigate potential damages to their properties caused by natural disasters.

7 Swiss Visual Pro Product Lines Earthquake Residential and Commercial Insurance These innovative insurance products provide coverage against risks of direct physical loss of or physical damage to the insured property directly caused by Earthquake, Fire and Explosion following an earthquake. Flood and Earthquake Residential and Commercial Insurance These innovative insurance products offer comprehensive insurance coverage against risks of direct physical loss of or physical damage to the insured property directly caused by Flood, Earthquake and ensuing perils. Both types of Swiss Visual Pro Insurance products are offered in flexible packages for different combinations of essential coverages to fit particular insurance needs of homeowners and commercial entities. In the case of residential products, homeowners can cover their Home, Auxiliary Structures (such as garages and storage sheds), Personal Belongings and more. The policy automatically covers the cost of debris removal and temporary living expenses that homeowners are likely to incur in case of severe or total damages to their dwellings. Europa Re endorsed commercial products are designed for business owners to protect their Commercial Buildings and Facilities, Auxiliary Structures (such as utility rooms, storage rooms, garages) and Contents in the insured building. The policy coverage includes the Cost of Debris Removal and the Loss of Profit due to interruption of business activities arising from severe or total damages to their commercial property.

8 Agricultural Insurance To increase farmers access to effective weather risk insurance products that meet their weather risk management needs, Europa Re has developed a comprehensive agriculture insurance programme which has been launched in FYR of Macedonia. The program supports Area Yield Index Insurance (AYII) - a comprehensive and innovative agriculture insurance product that protects farmers against all climatic, naturally occurring and biological perils it is an all-risk loss of yield policy which functions as an Area Yield Shortfall Guarantee. AYII policy insures farmers against severe drops in area yield index - the municipality average yield for each selected crop. The insured yield is established as a percentage of the average yield of the municipality. An indemnity is paid if the realized yield for the municipality is less than the insured area yield, regardless of the actual yield of a policyholder s farm. Claims pay-outs are completed automatically as there is no need for loss assessment at individual farm level. AYII is sold exclusively by certified local insurance companies participating in Europa Re programme. AYII provides coverage for the following crops: Wine Grapes Spring Corn Autumn Wheat Barley

9 Comprehensive Claims Management Services The Innovative Image-Based Claims Management System behind the Swiss Visual Pro Catastrophe Insurance Product Line ensures that policyholders can quickly get back to their normal lives after a natural disaster by receiving a swift and fair claims settlement enabled by: Quick and efficient claims settlement procedures Highly trained international claims management team Innovative technology to ensure proper damage assessment Adequate and swift claims payment backed by Europa Re reinsurance programme How to Purchase Swiss Visual Pro Insurance Products? Swiss Visual Pro Catastrophe Insurance products are sold and serviced exclusively by Europa Re accredited insurance companies. Only a sales person employed by or an insurance agent contracted by Europa Re accredited insurance partners can provide clients with a binding premium quote for an insurance coverage appropriate for their property and budget, explain what is covered under the policy and help them choose and purchase the right insurance coverage. Backed by a fully automated underwriting and pricing system, Europa Re partner insurance companies process all Swiss Visual Pro Insurance policy applications, perform policy renewals, collect insurance premiums, and accept claims notifications after damages inflicted by natural disasters.

10 Contact: Europa Re Office in Zug: Bundesplatz 16, CH-6300 Zug, Switzerland Phone: +(41) Fax: +(41) Corporate Website: Representative Office of Europa Re in Albania: Ibrahim Rugova - Kompleksi Green Park, Kati 7-te, Apt no. 30 Tirana, Republic of Albania Phone: +(355) Representative Office of Europa Re in Serbia: Sremska 4/III, Novi Sad, Republic of Serbia Phone: +(381) Representative Office of Europa Re in FYR of Macedonia: Mirce Orovcanec, no. 1/11, 1000 Skopje, Republic of Macedonia Phone: +(389)

11 Supported by: Building Resilience to Disasters in Western Balkans and Turkey