Monte Carlo Survey Part II
In association with Swiss Re, Monte Carlo Today conducted a survey of senior industry executives ahead of and during the conference. The responses to various key questions will be published in this newsletter.
Is the key to closing the protection gap making things simpler and more efficient within the industry?
“Yes, it is. Underinsurance is influenced by many factors not under direct control of insurers, but insurers have powerful tools to close the protection gap. Stronger risk models and earth science allow for simpler, more transparent products, even under increasingly complex regulation. Technology is breaking old and stiff distribution paradigms.
“We understand insurance consumer choices better than never before. But the last mile can only be connected through more effective public/private partnerships that tackle existing barriers more effectively.”
Ingrid Carlou, chief executive, Patria Re
“In many instances, insurance is too expensive, not understood or just unappealing. In order to address these shortcomings, we need more entrepreneurship across the industry. With digitisation, many traditional barriers to entry are set to disappear. Qatar Re is generating about one third of its premium income with insurance entrepreneurs.
“By financing innovative products or distribution methods through pro-rata capacity and bespoke advice we hope to contribute to making the insurance market not only more diverse but also more efficient.”
Gunther Saacke, CEO, Qatar Re
“The industry talks a lot about alternative capital and catastrophe risk but it should focus more on the protection gap. In some Asian countries it is at around 80 percent. The industry must come together and innovate to help bridge this gap.
“Simpler products can help but it is also a question of education, working with governments and ensuring that insurance is affordable. Education at all levels is important. There are some fantastic initiatives being developed to help bridge this gap and we are fully supportive of anything that can be done.”
Alice G Vaidyan, chairman-cum-managing director, GIC Re
Casualty: are we doomed to make the same mistakes over and over again?
“Market forces are more powerful than mere swimmers in the water. Individuals can take action to protect themselves and companies, but the market moves with the power of ocean tides. Training, disciplined thinking about risk and memories of the 1980s can help inform company decisions. There will be winners and losers. “But to paraphrase Warren Buffett: ‘Only when the tide goes out do you learn who’s been swimming naked’.”
Bradley Kading, president and executive director, Association of Bermuda Insurers and Reinsurers
“It has been said by those wiser than I am that the only way to rate casualty business accurately is to do it retrospectively. The cyclical nature of the market will always drive premium rates down and the long tail nature of much casualty business will always mean that rate adjustments will come too late.
“Changes to liability regimes make accurate prediction of the future impossible. Casualty business is an area of considerable interest in developing economies and an area of potential significant growth and diversification. Fortunes may be made but others will, surely, be lost.”
Clive O’Connell, partner, head of insurance and reinsurance, McCarthy Denning
“Some are; some aren’t. We have better data, better techniques and more actuarial science all applied intelligently to pricing casualty risk. On the reserving side, the level of public disclosures has had an impact on reserving practices that may have been too favourable in the past. But some will fall to the same mistakes.
“We should be worried that new total return re/insurance models may revert to cash flow underwriting, focusing on past results and missing future trends.”
Tad Walker, CEO, PartnerRe P&C
