Re/insurers urged to be more ambitious in meeting demand for coverage
Re/insurers have been urged not to walk away from risk and to instead work out ways to meet demand at a recent insurance summit.
The PwC Insurance Summit held in Bermuda last week, also saw discussions on how geopolitical risk is affecting the re/insurance industry, the accounting firm said.
Matt Britten, partner - insurance, PwC Bermuda, said: “We heard about the need for the industry to be more ambitious in meeting demand for coverage, and not to walk away from risk – nor to consider certain risks as uninsurable – but instead to address the change in the probability of risk, drive clarity on coverage, and better define who are the best owners of risk throughout the risk chain.
“We also heard a lot about the rapid evolution of the risk environment – and how sustainability, economic, geopolitical and social risks are all becoming more correlated.
“In closing the protection gap around these risks, the industry needs to also help close the knowledge gap around both risk and the critical role that insurance plays.”
The summit also heard that geopolitical risk is an increasing concern for reinsurers.
The event, presented with the Financial Times, featured a line-up for industry leaders including Kevin O’Donnell, president and chief executive officer, RenaissanceRe Holdings, and Eric Andersen, president, Aon.
Arthur Wightman, PwC Bermuda, territory and insurance leader, said: “For the first time in a very long time reinsurers are having to deal with geopolitical risks – and that adds a whole layer of extra complexity that we haven’t seen before, and needs to be factored into the strategic decision-making of companies.
“Right from the boards and all the way through the organisation, there needs to be an additional layer of focus on these emerging risks, and particularly the dynamics in different parts of the world and how they’re emerging.”
He added: “The Bermuda market plays an outsized hand in responding to geopolitical and other growing global risks including cyber, and climate – responding to catastrophic events has always been part of the DNA of Bermuda.”
Bermuda makes up around 36% of the global reinsurance market and is the largest supplier of catastrophe reinsurance to U-S insurers, he noted.
Reducing the cyclical nature of the re/insurance market was another focus of discussions at the Summit. After failing to earn their cost of capital in the last five years out of six, reinsurers have finally started to drive through significant price increases as they respond to rising inflation and substantial natural catastrophe and war-related claims.
Speaking at the Summit, attended by nearly 300 industry professionals from over 50 different re/insurers and other organisations, Jim Bichard, PwC’s Global Insurance Leader, weighed in on the question of how long the hard market was going to last. “There is no doubt about it that we are in a very hard market at the moment,” he said. “There is a pretty good consensus that this coming renewals season is going to be very strong – and many factors impact that.”
He added: “I have had quite a few people say to me this isn’t a hard market for reinsurance – this is just the new normal.”
Bichard was moderating the session, Dialogue: Reinsurers Set the Pace, but for How Long? with Christian Dunleavy, group chief underwriting officer, Aspen, Scott Egan, chief executive officer, SiriusPoint, and Laura Taylor, president, Nephila Holdings.
Also at the conference, re/insurers tackled the increase in the cost of catastrophe claims from an increasing number and variety of extreme weather events.
According to PwC’s 2023 Reinsurance Banana Skins Survey – climate change is the industry’s number one risk once again as reinsurers bear the brunt of the cost of catastrophe claims from an ever-increasing number of extreme weather events.
“As these losses spiral upwards, our survey highlights the growing concerns that some areas and types of business could become uninsurable,” Wightman said. “The other big risks at the top of the boardroom agenda centre on cyber, technology, talent and regulation – all topics you will be hearing much about today.
“As the world continues to change at a relentless pace, the risks facing organisations, people – and the planet – will only continue to rise. The challenges to the industry come at a time when the protection gap is widening at an accelerating pace - and could reach $1.86tn by 2025, with the Asia-Pacific region accounting for almost half of all uninsured risk, according to PwC research.”