‘Our raw material’: uncertainty is an opportunity, not a threat, for reinsurers
In a time defined by geopolitical fragmentation, accelerating technology change and climate-driven volatility, the question for the re/insurance industry is not whether uncertainty is rising, it is whether the market’s capital, talent and underwriting architecture are positioned to capture the opportunity it creates.
Discussing ‘The next era of risk and opportunity,’ at the Business Development Agency Risk Summit, held in Bermuda this week, panellists Simon Burtwell, EY Bermuda Partner and regional consulting leader, Robert Bisset CEO, North America, at Lockton Re, David Govrin, group president and CEO of global reinsurance at SiriusPoint and Danish Iqbal, CEO of Somerset Re looked speculatively to the future.
Govrin said: “We’re in the business of risk. Uncertainty creates opportunity.” The opportunity begins with the changing nature of risk itself. Gorvin noted, “risk is harder than it’s ever been to price.” The familiar underwriting toolkit of historical loss data, model extrapolation, and long-term trend lines is under pressure. “It’s an industry that historically has relied on the past to help inform how we price today. But the past doesn’t tell us as much about the future as it used to.”
Geopolitics, technology and climate are reshaping the underwriting problem simultaneously. “We face the geopolitical environment, which is probably the most uncertain it's been in 80 years, the implications of technology changing faster than I think we've ever experienced, and climate change,” Govrin continued. Together, these forces are eroding the predictive value of historical data and increasing the premium on analytical judgment, creativity and capital flexibility.
That dynamic is already influencing how the industry structures itself. Over the past three decades, capital has progressively detached from traditional institutional structures. Govrin described the turning point: “ILS started the horizontalization of the industry; prior to that, you had to have capital, operations and underwriting in a vertical stack in big insurance companies.”
Today, that stack has been dismantled. “You turned it on its side, you can have capital separate through ILS or MGA and ops and tech separate through InsureTechs,” Govrin explained, creating a market where entrepreneurial underwriting talent can operate independently of balance sheets.
For Bermuda, this structural evolution reinforces the island’s long-standing role as a problem-solving capital hub. New risks tend to attract new capital formations, and historically, those formations have gravitated to jurisdictions capable of combining regulatory credibility with innovation, aspects the panel agreed Bermuda possesses.
As uncertainty expands the boundaries of insurable risk, the industry’s competitive advantage will lie in its ability to structure capital, talent and underwriting judgment around emerging exposures. Uncertainty is not merely a challenge to manage. It is the condition that keeps the industry relevant.
Did you get value from this story? Sign up to our free daily newsletters and get stories like this sent straight to your inbox.
