‘Opportunists’ causing more insurance claims are in the sights of ratings agencies
A rating agency representative said yesterday (March 7) that he would be targeting “opportunists” who have caused a spike in claims through marketing technology.
Joseph Petrelli of Demotech told the Bermuda Risk Summit that his research highlighting the issue had changed his perspective.
Petrelli said: “I’m beginning to look at the insurance industry as if it were an iceberg. It’s what you can’t see that sinks the ships.
“These changes in claims frequency are critical, because opportunists are instigating them.
“Whether we’ve abdicated our authority over claims frequency or whether part of that authority has been usurped, it doesn’t matter. If you can’t control your rate level, you can’t control your pricing and you can’t control your balance sheet.”
Petrelli was speaking at a panel debate titled “Global Financing Conditions—a Rating Agency Discussion”, on the second day of the Summit at the Fairmont Hamilton Princess.
He added: “Why do you attack insurance companies? Because we are the only industry in the world that can go broke with a pile of cash.
“We are going to look for ways to determine which companies are being targeted, because a targeted company is less financially stable.”
The panel discussion, which focused on how a volatile macroeconomic environment impacts credit policy, regulation and the implementation of environmental, social and corporate governance policies, was moderated by Edward Mishambi, SVP and chief risk officer of Europe at RenaissanceRe. Other panellists were Stefan Holzberger, chief rating officer at AM Best; Brian Schneider, senior director at Fitch; and Peter Giacone, global head of insurance at KBRA.
Giacone reflected on an “interesting” economic environment.
“Many of the macroeconomic indicators are mixed,” he said. “It’s not like the great recession of 2008. It’s a different environment from the one people were expecting.
“It’s very volatile and we’re trying to assess what this means for insurance companies.”
