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Roland NUSSBAUM Managing Director of Mission risques naturels (MRN), Paris, FR

FIAR 2012, SINAIA, ROMANIA Session on Catastrophic Risks Insurance Natural Catastrophe Risk Management Experiences and perspectives. Roland NUSSBAUM Managing Director of Mission risques naturels (MRN), Paris, FR AFPCN Board , FR National DRR Platform. Preambles.

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Roland NUSSBAUM Managing Director of Mission risques naturels (MRN), Paris, FR

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  1. FIAR 2012, SINAIA, ROMANIASession on Catastrophic Risks InsuranceNatural Catastrophe Risk ManagementExperiences and perspectives Roland NUSSBAUM ManagingDirector of Mission risques naturels (MRN), Paris, FR AFPCN Board, FR National DRR Platform

  2. Preambles Former presentations to the Romanianinsurancemarket… What dit happensince 5 yrs?

  3. An association dedicated to NatCatriskknowledge and reduction, in partnershipwith public authorities,created in 2000 between: Whatis MRN ? Mission des sociétés d’assurances pour la connaissance et la prévention des risques naturels www.mrn.asso.fr

  4. The MRN team • Permanent staff members: engineers, geoscientists, PhDstudents… • Collaborative network of hundreds of correspondents : • insurancecompanies • State and local authorities • Stakeholders and thematic associations

  5. Activities of the association

  6. MRN GIS Platform GENERIC (all risks) THEMATIC (risk specific) insuranceundertakings Geoservices Extraction Analyses Cleaning Reporting Monitoring, gathering, acquisition Methods Interpreting Models Integration Studies Insuranceassociations and public partners Products and services of general interest Transactional and geographic DB Data warehouse « Observatory »

  7. MRN assetexposureobservatory Preliminaryassessmentof stormsurgeexposure number of propertyassets (personal and commercial lines / CRESTA zone) Areas subject to stormsurge

  8. MRN intranet geoservices infrastructure A web based GIS toolto support insuranceprofessionnals on the naturalhazardexposureanalysisfor the sites of a commeciallinescustomer Users

  9. Use of MRN conventionalhazard data sets atcompanylevel Analysisof a commercial linesporfolioexposure to floods

  10. Natural Catastrophe Risk ManagementExperiences and perspectivesOUTLINE • NatCatInsuranceSchemes in the EU • 30 Yrsof French experience, Lessonslearnt • Riskknowledge, a main PPP issue • Concludingremarks

  11. Insurance Schemes in Europesource : Insurance Europe Source CEA • Insurance schemes widely vary across Member States due to: • Different levels of risk exposure • Underestimation of risk (ie low risk perception) • Lack of awareness aboutrisk prevention • Anticipation of state aid or compensation Key: Optional Coverage Compulsory extended coverage: Recently put in place In project Minimal role played by insurers Colour intensity proportional to penetration rate of Natural Hazard coverage + * + * + Source CEA

  12. 1. NatCatInsurance and riskmanagement: 30 Years of experience in France, as an example • Loss records • Lessonslearntfrom a recentevent: Xynthia • An integrated DRM scheme • Insurance component • Prevention component • Risk basin strategies / governancetowardssustainability • Lessonslearnt and furtherdevelopments

  13. 1.1. Property damage lossescaused by natural catastrophes in France floods windstorms subsidence Sources : FFSA-GEMA (2011) & MEDDTL / BD GASPAR (2011) Author: MRN – May 2011

  14. 1.1. Property damage lossescaused by natural catastrophes in France Sources : FFSA-GEMA (2011) & MEDDTL / BD GASPAR (2011) Author: MRN – May 2012

  15. Carte de répartition par département de la centaine d’événements complémentairessource BD GASPAR, SANDRE, traitements MRN

  16. 1.2. XYNTHIA 28 February2010 Winter storm and stormsurge

  17. 1.2. Property damage lossesXynthia Event28 February 2010 53 fatalities and 79 injured people in France More than 2.5 bn € of economiclosses, out of which 1.5 bn € insuredlosses

  18. 1. NatCatInsurance and risk management: 30 Years of experience in France, as an example 1.3. An integrated DRM legal and regulatoryscheme

  19. 1.3. An integratedDRM scheme (1)Mappingenvironmentalrisks, according to insurabilityand associatedinsurance solutions in France Technologicalotherenvironmentalrisks Natural hazards Domino effects CatTechRisks(law 21 July 03) Forest Fire Thunder Storm Hail Snow Hurricane Earthquake Volcanic Landslide Subsidence Avalanche Flood) Assurablility • Environmentalliability(law 01 August 08) • Mesurable deteriorations : • Water • Soils • ProtectedSpecies and Habitats • Mesurable impacts on theirecological services Cover EnvironmentalliabilityinsuranceASSURPOL Pool CatTECH IRD RI TGN CATNAT

  20. 1.3. An integrated DRM legalscheme (2) NatCat 1982 law, revised 1995, 2003

  21. Insurancecompoent 1.3. Main features of « NatCat » insurancescheme • Compulsoryextendedcoverage to property damage contract • Cover type, level of premium and basic deductible are the same for all insureds, adopted by law • Insurance-like business, excess of annuallosses by direct insurers are toppedat 100 % loss ratio on retentionafter 50% quota share • State operating as reinsurer of last resort, on top of CCR (State ownedreinsurancecompany) both QS & annual stop lossreinsurancetreaties • The cover (indemnitybased, no limitation) istriggered by administrative recognition of natural catastrophe at the level of eachaffectedmunicipality

  22. 1.4. Riskreductionincentiveswithin the CATNAT scheme RISK REDUCTION COMPONENT

  23. RISK REDUCTION COMPONENT Riskreductionincentiveswithin the CATNAT scheme

  24. Riskreductionincentiveswithin the CATNAT scheme RISK REDUCTION COMPONENT

  25. Volet prévention Riskreductionincentiveswithin the CATNAT scheme • A 12% levy on NatCat premium (150 Mio €) isfinancing a public Fund (« Barnier Fund »), dedicated to subsidize: • Atindividuallevel (must beinsured): • Expropriation fromhighlyexposedassets • Friendlyacquisition of property if severelyaffected • Vulnerabilityreductionmeasureswithin the limit of 40 % of total costs ( studies and works) • Atcommunitylevel: • PPRNstudies(50 % of theircosts) • DRR structural and non structural measurestaken by communities (PAPI, PSR), within the limits of 20 to 40 % of their total costs • Riskawarenessraising and insuruance information campaigns

  26. 1. NatCatInsurance and risk management: 30 Years of experience in France, as an example 1.4. Riskbasin strategies / governancetowardssustainability

  27. Riskretention and transferalong LEP Curve(for floodsunderNatCatregime) Without DRR measuresatrisk basin level With structural DRR measuresatrisk basin level

  28. 1.4. Flood riskreductionstrategy of a floodplain management authority(1) Source : Stratégie d’aménagement à l’horizon 2013 pour lutter contre les inondations sur le bassin de l’Oise, Entente Oise Aisne, 2009

  29. 1.4. Flood riskreductionstrategy of a floodplainmanagement authority (2) Source : Stratégie d’aménagement à l’horizon 2013 pour lutter contre les inondations sur le bassin de l’Oise, Entente Oise Aisne, 2009

  30. 1. NatCatInsurance and risk management: 30 Years of experience in France, as an example 1.5. Lessonslearnt and future developments

  31. 1.5.1. Lessonslearnt Toomanyeventsunavoided, Severalsignificantevents, but No extremeevent in 30 yrs Very efficient/popularscheme, despitecompulsory extension Delayed DRR policies and measures, althoughrecentsignificantimprovementsat all levels, but effects on averageannualloss are a long term issue

  32. 1.5.2. Future developments • Implementriskknowledge, as major DRR governancedecisionmakingtool(see § 2.), involvingstakeholders as producers and/or end users • Proposal of a lawintroduced last month, with the following main changes on FR NatCatscheme: • Introduce objective recognition criteria for events • Allowinsurers to differentiateNatCat ratings for commercial lines • Restricted conditions for subsidence coverage

  33. 2. Riskknowledge, a main PPP issue

  34. 2.1. Present situation of NatCatriskknowledge in FR • Public hazarddata are a main input to insurancemarket, throughMRN hazard / riskknowledge management tools : • Observatories of public hazard data coverage, exposure, public preventionpoliciesefficiency • Services to the insurancecompanies • Launching of a National Observatoryfor Natural Risks (ONRN), as a main imput for DRR governancedecisionmaking, with public/privatestakeholders • Data sets coverage & qualityevaluation, sharing & dissemination, • Hazard/Riskmapping, « open source » modellingmethodologiesand decisionmakingtoolsdevelopment& uses

  35. Sample flood risk indicators (1) 37

  36. Sample flood risk indicators (2)

  37. Sample flood risk indicators (3)

  38. Concludingremarks

  39. To summarize on DRM/DRR and relateddomains: legal/cooperation frames,at international, regional and national levels (*) Hyogo Framework for Action and Millenium Development GoalsOtherdomains of UN conventions integratingNatCatprevention (by order of apperance) :Heritage, HumanRights, Cross border rivers and lakes, Alpine region, CCA…

  40. Trend towardsintegrated DRM costs control Is it an equilibrated country profile? Source :PLANAT, 2007, Safety at which cost?

  41. ConclusionMajor trends for NatCatinsuranceschemes • Integration of RiskFinancingand Transfer within DRM atmostgovernancelevels • Convergence towards: • Riskmetricsmethods, including LP-HI scenarios, • Loss, exposure and DRR policy data sharedatappropriateaggregationlevel, • Holisticriskbasedapproaches & decisionmakingtools • Riskgovernance bodies involvingstakeholders, all relevant scales • Innovativerisktransfer and public privatepartnerships to addressthese issues

  42. Thank you for your attention roland.nussbaum@mrn.asso.fr Wood sculpture of Atlas cedartree,thatwasfallen by MARTIN Storm of 27/12/99

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