With just a week left before 1 January many in the international reinsurance market will not be looking forward to a peaceful Christmas as the 1/1 renewals research their often hectic conclusion.
However for the industry itself it needs to take heed of the month ahead and the significance both in its name and the year it launches.
January is named after the Roman god of motion, Janus. The two faced god was said to look after passages, caused actions to start and presided over all beginnings. Since movement and change are interconnected, he had a double nature, symbolised in his two headed image.
However he is a god with two faces and the industry needs to ensure that the two faced image is not carried further than the end of next month.
2022, will be a huge year for the industry in so many levels. COVID is if anything having an even more profound effect on the planet currently in the midst of a new and more transmissible variant, and the market is under pressure to play its part in supporting the global economy as it seeks to weather a storm which does not seem to have an end in sight.
It will need to shake off the stain of the business interruption disputes which saw the trust in the industry plummet. It can no longer be viewed as two faced on claims payments rather look to establish its reputation and enhance the understanding of the role it plays in supporting all aspects of society.
While we can expect COVID to abate in the year to come the same cannot be said of the climate issues and here the market has a huge problem.
The dive to a transition to net zero has become a global issue and ESG will be one of the biggest factors for businesses in 2022 and beyond. However, there is no magic wand that can move the world’s power generation from carbon to net zero in the space of days. Instead it will be decades and those decades will need to be powered by fossil fuels to some degree.
For insurers they will have to chart a course where they are able to support the current energy sector whilst driving the transition to net zero.
As we have seen in recent weeks Lloyd’s has been accused of being two faced in its ESG policy with campaigners saying the market is simply not walking away from enough carbon energy business for its liking.
Throw in the impact of climate change on the frequency and severity of natural perils and the market will also need to work with governments across the world to offer support where they can but manage the expectation that the market can simply pick up the costs of disasters whatever their scale.
Finally London has a local issue which threatens to damage the market’s ability to trade. The highly publicised and £400 million plus blueprint for the future was launched two years ago to great fanfare. Once again it was accompanied with the statement that this was the market’s biggest, best and final chance to change and create a modern process.
COVID forced a move to remote working and has enhanced the speed of the integration of technology into the London market’s processes. However, the ambitious plans unveiled by Lloyd’s CEO John Neal were around five key areas. The plans were clear as were the expected outcomes.
Those who have been in the London market for a number of years have a scepticism that has been driven by a history that has been littered by much hailed then quickly failed initiatives that would redefine the way London did business.
The lack of any tangible progress has many in the market fearing that the blueprint will fail to turn into anything concrete. The year ahead will require a degree of progress or in 12 months’ time The market may well look back at a year when Janus opened the door to new beginning but the industry simply failed to find the right passage and is once again viewed as having lost its way.
Editor, Emerging Risks