Thu, Feb 01, 2007 - Page 12 News List

Fubon going into weather insurance

By Jackie Lin  /  STAFF REPORTER

Fubon Insurance Co (富邦產險), the nation's largest property and casualty insurer, yesterday announced the launch of a weather insurance policy to help business owners cover potential losses stemming from unfavorable temperatures, rainfall and wind.

Fubon will be the third insurer in Taiwan to offer weather insurance, after Central Insurance Co (中央產險) and Tokio Marine Newa Insurance Co (新安東京海上產險).

"Based on its performance in Japan and the US, this product should also have great potential in Taiwan, although the local market is still in its infancy," Fubon vice president Cliff Yang (楊清榮), who is in charge of the commercial insurance product division, said at a press conference yesterday.

The insurer plans to target market sectors which are especially prone to revenue losses resulting from weather changes, such as theme parks, hotels, power plants, the beverage market, sporting events, concerts and other performances, as well as the film industry.

Insurance policies will be tailored to each company's geographic location, weather analyses over the past few years and the correlation between revenues and changes in the weather, he said.

It currently targets theme parks as potential customers, with the nine-day Lunar New Year holiday starting on Feb. 17 expected to draw huge crowds on sunny days.

To help manage risks, Fubon would provide interested customers with a weather risk analysis service, the company said.

In the case of theme parks, daily revenue and visitor figures over the last three years' Lunar New Year holidays would be used to analyze the impact of rainfall changes on corporate income.

At one theme park, Fubon said, it found that the number of visitors dropped by 10,000 a day when rainfall exceeded 15mm. This meant that, with a ticket price of NT$1,000 per person, the theme park's daily revenues would shrink by NT$10 million (US$303,300) on rainy days.

The maximum compensation when rainfall exceeds a certain level would be set at NT$10 million in such a case, said assistant vice president Raphael Lin (林承斌), who is in charge of the casualty product and claim department.

"Insurance premiums will be around 20 to 30 percent of the insurance payout they request. Conditions of the policies will be quite flexible; there are no uniform standards," Lin said.

However, as weather forecasting has achieved a reasonably high degree of accuracy, such insurance transactions must be conducted one week before the insured period, he added.

Fubon obtained "twAAA" ratings on insurer financial strength and long-term counterparty credit from Taiwan Ratings Corp (中華信評) in November last year. The outlook on the long-term rating is stable.

The insurer has a market share of about 20 percent, which is twice as big as that of its nearest competitor.

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