Re/insurance industry must go after underinsured as climate change bites: Bermuda Reinsurance Conference 2019
The global re/insurance industry must do more to promote insurance to underinsured communities as climate change increases the frequency of catastrophic weather events, according to Rick Pagnani, executive vice president and head of insurance-linked business at PIMCO.
Speaking at the 2019 Bermuda Reinsurance Conference hosted by S&P Global Ratings on November 6, Pagnani said securities such as ILS can help stabilise a regional or community economy in the aftermath of an event by encouraging a stimulative rebuild.
“It's important that we think about promoting insurance to underinsured communities," he added.
Not everyone agreed that climate change threatened the industry, or the world. Brian Young, president and CEO at Odyssey Group, told conference attendees that the industry may be too focused on the issue, noting that Florida recently went without a hurricane for the longest period in a century, while Japan also recently enjoyed a long respite from typhoons. "Cats happen in bunches--it's random. With that level of variability, you're going to have some clustering in events."
However, most reinsurers have been convinced of the seriousness of the climate change threat, following record back-to-back years of catastrophe losses in 2017-2018.
Roger Grenier, senior vice president in the global resilience practice at AIR Worldwide, a consultancy that helps with catastrophe (cat) modeling, warned that "the broad consensus is that tropical cyclones will become more frequent, and likely stronger," because they derive energy from warm waters. The US faces an increasing number of severe weather days as time goes on, he said. .
John Jenkins, CEO at SCOR Americas P&C Reinsurance, said the industry is gathering as much data as it can as it attempts to tackle the problem, noting that exposures have "grown significantly," specifically related to the recent string of wildfires in California.
"It's a real issue that we as an industry have to use data a lot better than we have,” he added.
But Brian Duperreault, president and CEO at AIG, suggested climate change might already be too big for the industry to incorporate it into models.
