COVID-19 has created a ‘knowledge gap’ for the insurance industry, says Catlin

The COVID-19 pandemic created a knowledge gap within the insurance industry, leading figures discussed at the Bermuda Risk Summit yesterday (March 6).

Stephen Catlin, executive chairman of Convex, pointed to a shortage of experience handling the hard market conditions currently facing insurers and reinsurers.

“We have a hole in experience caused by the pandemic,” Catlin told the Bermuda Risk Summit at the Fairmont Hamilton Princess.

“We shouldn’t forget that. I’ve noticed that, in our firm, the 20 to 35 age group were gagging to get back into the office because of the opportunity to network, and they wanted to learn through osmosis from people who have been around for some time.

“They had a big break—two-and-a-half years.”

Catlin said many underwriters had never seen a hard market before, adding: “You can teach people how to read the hard market.”

Peter Bell, CEO and managing director of Everest Reinsurance Bermuda, noted there is a gap in talent in the 25-plus age range.

“That’s a difficult gap to fill,” he said. “There are people coming through and they will move up the ladder. That gap is the issue.”

Catlin and Bell were speaking on a 45-minute panel discussion moderated by Sophie Roberts, head of The Insurer TV. They were joined by Christopher Schaper, CEO of AIG Re and deputy chair of the Association of Bermuda Insurers and Reinsurers, and Megan Thomas, CEO of Hamilton Re.

Hard market conditions were a key part of the discussion, with Catlin saying: “In 50 years, I’ve never seen a market quite like this.”

He added: “The returns in the last 10 years have been completely inadequate for the risks we take in the industry. Investors have taken a dislike to the lack of return.”

Thomas outlined a number of events in recent years that had conspired to create today’s conditions, including tornados in Kentucky and major floods in Australia.

“2022 showed some interesting converging dynamics that were all very unusual,” she said.

“Larger events that people weren’t expecting over the last few years have created a fear factor.

“A lot of events have caused an issue in the cat space that has resulted in the hard market we’ve seen now.

“Reinsurers not being able to secure their capacity early enough did not allow them to release their capital, which caused a lot of chaos.”