curraheeshutter / Shutterstock.com
To drive sustained profitable growth new markets are needed, and offshore energy could represent a significant opportunity, says Tom Johansmeyer, assistant vice president, reinsurance services, marketing at ISO/Verisk Insurance Solutions.
It’s no secret that the global reinsurance industry needs to source more original risk. A sustained focus on established markets leads to the myopic process of shaving fractions of a basis point off each transaction, generally with the modest hope of nudging returns higher. But you just can’t cut your way to real growth. It takes new markets to drive the sustained profitable growth that C-suites around the world crave. And offshore energy could represent a significant original risk opportunity.
Although our industry talks often of the abundant—or even excess—capacity available, there doesn’t seem to be enough to meet the needs of the offshore energy market. Public reports put the sector at only $7.5 billion, compared with an aggregate physical value of up to $115 billion (excluding platforms located in state waters), according to data from Verisk Analytics subsidiary Wood Mackenzie. Pair this with the fact that original insureds are struggling against economic headwinds and believe they can absorb losses with their balance sheets, and the challenge becomes one of both supply and demand.
Of course, nothing’s ever that simple.
energy, risk, Mackenzie, Wood, cat-in-a-box, ISO/Verisk, Johansmeyer, ILS, technology