The atmosphere of fear that has been propagated lately in the reinsurance industry is unfounded, Catlin’s chief executive officer told delegates at the PwC/S&P Bermuda Reinsurance 2014 conference.
“Pricing is a lot higher today than it has been historically,” said Stephen Catlin. “If you look at the traditional risk transfer market, the pricing is not down 25 percent, it’s down half that.”
He said that while last year’s Monte Carlo Rendez Vous was characterized by the structural changes faced by the industry, this year’s Rendez Vous was very different.
“I see alternative capital as an opportunity,” he said. “The talk in Monte Carlo this year was about the importance of relationships and the fact that the traditional product is different from the commodity product.”
He added that the industry faces two major threats: cyber risk and pandemic.
“In terms of cyber, it’s the only risk I can think of where the entire world can be hit by the same loss at the same time.
“It may never happen but we know there are terrorists out there trying to cause damage. I see it as a threat to the industry but also an opportunity to give cover to our clients - as long as we can cope with the nature of that risk.
“We need to find ways of giving real cover to businesses for cyber exposure while recognizing that we cannot cover a global disaster.”
He went on to highlight process as a major opportunity for the industry going forward, saying that there is immense room for improvement.
“This industry is Luddite in terms of its process,” he said. “I think there will be winners and losers. The winners are going to be those companies that can deal with and address process and do B2B.
“We as individual carriers have to work out how we can process seamlessly and more efficiently.”
The other opportunity, he said, is to work out how distribution is going to be in the future.
“Roles are going to change – we need to understand that and create relationships.”
He closed by highlighting two key messages: one was that insurers and reinsurers need to be more aware of the importance and value of what they do.
“We are very fortunate in that what we do adds social value - and we should be proud of that and talk about it,” he said.
He also echoed the sentiments expressed at Monte Carlo, saying: “Relationship counts – it’s important, it’s the foundation of our industry.”
Catlin, Reinsurance, PwC, S&P, Bermuda Reinsurance 2014, Stephen Catlin, Monte Carlo Rendez Vous