The global reinsurance market was described as “healthy but evolving” in Guy Carpenter’s January 01, 2022, renewals briefing. Last week you were reading Does Wholesale Distribution Increase Costs For Insureds? This week we’re bringing you:
10 Emerging Risks to Watch*
Insurance Journal examined industries experiencing changes and a few challenges due to the COVID-19 pandemic, economic forces and tough insurance market conditions in 2021. Here are 10 industry sectors that could see new and emerging risks in 2022 and beyond.
Cyber
Like the risk itself, the cyber insurance market is constantly changing and keeping carriers on their toes thanks to new threats, exposures and government regulations.
A market that was once brimming with capacity and soft rates is now experiencing tightening capacity and rate increases. Willis Towers Watson’s “Insurance Market Realities 2021 Spring Update” released in April noted average rates increases had jumped up to 25% to 50% from the 10% to 20% it reported in its previous update.
Cyber experts cite the escalating frequency and severity of ransomware attacks as the primary driving force behind the current market hardening.
According to a recent report from cyber analytics company CyberCube, global proliferation of ransomware is resulting in cyber claims outpacing premiums, and threatening insurer and reinsurer profitability. CyberCube said emerging threats associated with ransomware attacks, such as ransomware-as-a-service (Raas), have matured into “systemic issues.”
Insurance sector steps up recruitment efforts*
From corporate headquarters to college campuses, the insurance industry is reaching out and collaborating to attract talent.
Meanwhile, those involved in talent acquisition are contending with a remote working environment that has created new challenges to recruiting.
The Insurance Information Institute’s collaboration with HBCU Impact, a group dedicated to informing the Historically Black College and University community about the benefits of a career in insurance, is the product of a year’s planning, said Sean Kevelighan, CEO of the I.I.I. in New York.
The I.I.I. has produced a series of seven video profiles of leading insurance industry executives and regulators to be used by HBCU Impact in its classroom outreach activities, Mr. Kevelighan said, adding he expects to expand the collaboration between the two groups. “We’re just getting started. We’ve got ideas already that we’re working on,” he said.
The I.I.I. also collaborates with the Wharton Risk Center at the University of Pennsylvania in Philadelphia to host the university’s Hackathon, which most recently focused on climate risk. Mr. Kevelighan said the program saw “significant” participation with some 40 teams of students charged with developing and presenting innovative solutions to address climate change.
A view from the top of a ‘healthy but evolving’ reinsurance market*
The global reinsurance market was described as “healthy but evolving” in Guy Carpenter’s January 01, 2022, renewals briefing. While the market is well capitalized, the changing nature of risk has forced reinsurers to adjust risk appetites and pricing thresholds in response to ongoing and emerging sector challenges.
Guy Carpenter, a global risk and reinsurance specialist, and A.M. Best, estimate that the total dedicated reinsurance capital for 2021 was $534 billion, reflecting continued growth of almost 3% year-on-year. Increases were seen in both traditional rated reinsurance capital, as well as insurance-linked securities (ILS) capital.
Notwithstanding some negative rhetoric around the results of certain individual reinsurance businesses – in particular, those with portfolios predominantly weighted towards property catastrophe business – the Guy Carpenter Global Reinsurance Composite Index is on track to produce a combined ratio for 2021 of below 100%, including the impact of elevated catastrophe loss.
Climate change, cyber threats, inflation (both core and social), and the continued evolution of frequency and severity of catastrophe losses are fundamentally changing how reinsurers underwrite risks and view pricing and capacity allocations. This was evident in the January 01 renewals, according to David Priebe (pictured), chairman of Guy Carpenter.
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