The global re/insurance sector has been warned that it needs to do more to bridge the gap between the risks their clients’ face and the products they provide.
Russell Group held a virtual roundtable: Insuring the Uninsurable, which brought risk managers from leading FTSE 100 and Nikkei company representatives from the world’s largest re/insurance companies together to discuss the issue they face.
The results of the discussions have been published in an executive summary by Russell Group.
The discussion covered a host of topics from the transferring and management of risk through to the current covid-19 pandemic and the lessons that could be learnt from it.
The firm said the roundtable identified several core challenges:
- The importance of the risk manager speaking to the c-suite and getting their message to the boardroom.
- The need for the interconnectivity of risks need to be better understood across an organisation.
- Will the future role of the risk manager change as a result of the pandemic?
- Risk registers need to become more dynamic to account for the correlation and interconnectivity of risks.
- There is conflict within the c-suite between sustainability versus short-term interests (short term benefit v long-term benefit).
- A growing divergence between what is defined as a corporate risk and what is an insurance peril.
- Corporates want broader coverage and to transfer more risk, but insurers are limited by their solvency and ability to expand. Could captives and other forms of risk transfer play a role in this?
Suki Basi, CEO of Russell Group (below) said: “The message we are getting from our re/insurance clients and corporate partners is that the divergence between corporates’ risk requirements and lack of underwriting appetite across the specialty classes is a serious problem, which needs to be addressed.
“With traditionally only 20% of corporate risk currently insured, there is plenty of room for both sides to improve risk coverage. Given the current climate that we are in, now is the opportunity for both sides to step up and bridge this divide.
“At the heart of this conundrum, the market needs access to good data and more effective modelling tools, which can help corporates and re/insurers transfer and price risk more efficiently. This will this help organisations protect their balance sheets. It will also highlight the value that risk managers provide in protecting that balance sheet while helping c-suites across all organisations understand the complexity and interconnectivity of risk.”