Government risks can help re/insurers grow
Risks such as climate change and pandemics could offer huge growth opportunities to the re/insurance industry if successful partnerships could be achieved with governments, Julian Enoizi, chief executive of Pool Re, the UK terrorism pool, told Monte Carlo Today.
He said risks such as these are “implied liabilities” on governments’ balance sheets but they could successfully be covered by the market through certain forms of public-private partnerships (PPPs).
“PPPs offer huge opportunities for this industry as there are risks which the industry currently doesn’t insure,” he said. “If the industry wants to grow, it needs to work with governments to find a way to bring those risks into the insurance industry.”
Enoizi revealed that executives from the UK terror pool would meet peers from 14 other pools from around the world in October to discuss operational issues.
“We’ve been through major negotiations with our government in the past year, and governments around the world are looking at how the UK government operates and how that might apply to their own countries.
“The central question is: ‘what is the most appropriate model for reinsuring this risk?’” he said.
Enoizi added that while the growing risk of cyber crime has caused much debate in the industry in recent months, the goal of achieving a sufficient cyber pool was still a long way off.
“Since Pool Re’s inception, it’s all been about terrorism and fire and explosion, and following 9/11 it extended to other perils with two exclusions: war and cyber. In 2003, the cyber exclusion would have been about the theft of data. In 2015, the word cyber means something completely different,” he explained. “Today, you have things like hacktivism.”
Enoizi said that Pool Re needs to engage with the market to explore whether an offering is possible in the cyber space, especially as many increasingly see this as the biggest threat facing companies.
“People have different views about whether large scale catastrophic property damage—on the scale of 9/11—is going to happen again, but to use someone else’s expression: terrorists only have to be ‘lucky’ once.”
