Systemic risks will test private public partnerships – Enoizi

Broker Guy Carpenter’s newly appointed CEO of Europe and current global head of public sector said the way in which the global (re)insurance responded to the risks arising from the Russian invasion of Ukraine has highlighted the way in which the industry can work with the public sector to tackle some of the world’s systemic risks.

Julian Enoizi (above) said the world was facing a new risk environment and there remains risks which were of a scale that the (re)insurance cannot meet alone.

“The social and economic costs of natural, man-made and health-related risks are growing and require innovative solutions.  To deal with the breadth of these challenges requires partnership of the industry and governments in addressing hard-to-manage risks that threaten the prosperity and security of our societies,” he said.

He highlighted the work of Guy Carpenter and Oliver Wyman in advising the British and Ukrainian governments on how to attract approximately $1 trillion of investment to fund the reconstruction of Ukraine. The also played a role in establishing a war risk programme to cover vessels exporting grain from Ukraine under the Black Sea agreement.

Enoizi added: “Guy Carpenter can design and implement solutions by offering an advisory-led broking model. Drawing on the expertise of our sister companies further enables delivery of holistic solutions and most effectively leverages the power of our analytics and advisory capabilities to design solutions aimed at addressing ever-changing, complex risks.”

Speaking in the run up to the Monte Carlo reinsurance rendezvous Guy Carpenter chairman David Priebe said there were signs that the market was increasing its appetite for risks but uncertainty remained.

“Heading into January 2024 renewals, we believe demand for reinsurance will grow with reinsurers’ willingness to deploy capital also increasing—although underwriting discipline will not subside. Thorough preparation and thoughtful differentiation will enable cedents to adjust their own approach and leverage a range of solutions to transform risk into profitable returns.”

He continued: “Reinsurance industry veterans know this significant level of uncertainty is where our sector shines. Strategically transferring risk is our specialty and through innovation and collaboration we not only generate stability, but also opportunity.” He concluded his welcome by adding, “A new cadence has emerged, and we are equipped to thrive amidst this new normal of interconnected and perpetual risk.”

The industry’s response to the growing demand for cyber risk looks set to be a major talking point at the rendezvous with  Anthony Cordonnier, the broker’s global co-head of Cyber saying it is likely that third party capital will increasingly be deployed to support primary markets.

As the cyber insurance market continues to grow, the ability to attract new capital into the sector will be critical, noted Cordonnier.

“While traditional reinsurance balance sheets have proven to be a reliable source of capital to support the growth of the cyber market, we see the potential for third-party capital to play a role as well,” he explained.  “Although quota share and aggregate stop loss treaties dominate the cyber market at present, Guy Carpenter is working with cedents and markets to develop new cyber reinsurance structures, such as occurrence-based products, event XL, named perils covers and index-based products, all of which can provide crucial and tailored volatility and capital relief protection.”

He added: “While much more mature in other classes, the cyber ILS market is comparatively in its infancy. Accordingly, it is vital to engage with these parties to induce more confidence in cyber risk.”