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(Re)Connect day one – Post-pandemic lessons

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The word “unprecedented” must surely go down as the most commonly used description for the last 18 months, as economies worldwide were thrown into turmoil in the midst of the Covid-19 pandemic.

With many countries around the world now looking for ways to move on, the (re)insurance industry is also taking advantage of this 2021 conference season to assess its own performance during the pandemic and what it can do better next time.

Or even, how to make the unprecedented… more precedented.

On the first day of our 2021 (Re)Connect conference, post-pandemic lessons were front and centre of discussion, particularly around certainty of coverage and the market’s sensitivity around claims aggregation.

In a fireside chat, Convex chairman and CEO Stephen Catlin said clarity of wordings would be a key issue which needed greater attention in future, and reputationally the pandemic had been damaging for the industry.

“Woe betide an insurer that gives an ambiguous wording,” he said. “If an insurer does that, the courts will pretty much always award for the policyholder, not the insurer, whatever the intent may have been.”

This was echoed by Guy Carpenter chairman David Priebe, who said it was imperative that clients knew what is and is not covered to avoid disputes in the future. 

“We need to do a better job on new risks like pandemic and cyber, particularly in intangibles and non-physical damage. Reinsurers can help with solutions, from a risk-transfer standpoint and with better managing exposure,” Priebe explained. 

In a discussion centring on post-pandemic resilience, panellists including Chris Colahan from Berkshire Hathaway Specialty Insurance, Pool Re CEO Julian Enoizi and Markel International’s Nick Line highlighted how the pandemic had thrown a spotlight on how the industry needed to get better at envisioning and preparing for aggregation events.

The Black Lives Matter movement and the damage losses arising from protests generated an aggregation event which was unexpected by the strikes, riots and civil commotion market – and was unrelated to the pandemic, panellists said.

They advocated for more investment in research and development in order to better plan for the unexpected and “stop looking in the rear-view mirror”.

As Markel International CUO Line said: “All of our historical data, we just have to start throwing it away on everything because everything is changing so quickly.”

At the heart of it all, discussions around post-pandemic lessons on the first day of (Re)Connect centred on certainty – particularly on how to give better certainty to clients on coverage.

Berkshire Hathaway Specialty Insurance president for UK and Europe Colahan said during a panel discussion that his firm had actually had an increase in the demand for parametric products from clients, even though those products were not pandemic-risk-related.

Colahan noted that there was “hunger from customers to have clarity of cover”, even if it meant higher premiums.

“That is really all about developing something that allows customers to get paid as quick as possible,” he said, adding that smaller businesses could be irreparably damaged by cash constraints if it took months or years to settle claims.

“We have just paid our first Ida claim off a parametric policy,” he said. “Ida is still going and we are paying out a full limit policy, which shows parametric can work.”

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Greater certainty on payout triggers from parametric products was also highlighted by Guy Carpenter’s Priebe, who suggested that parametric index-style covers could be a way to get the ILS market involved with non-physical damage BI risks.

“We are talking to a number of ILS investors about non-physical damage BI-type solutions,” he said. “The hurdle is defining the parameters of the risk and being able to quantify and define it.”

Being able to generate certainty of cover in an increasingly uncertain risk landscape will go some way to improve the perception of the (re)insurance industry and its relevance.

On the need to bounce back better from the reputational impact from Covid-19, Pool Re CEO Enoizi summed it up nicely:

“If the perception is that we don’t pay claims or are unable to serve the needs of the real economy with good quality products, then we have got a problem.”

The full (Re)Connect agenda is available here.

To attend the conference, simply follow this link to register.

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