Sharing data will not inhibit an individual insurer’s business, but rather will promote business across the entire industry, says Tom Johansmeyer of ISO/Verisk Insurance Solutions and Rachel Anne Carter of Carter Insurance Innovations.
Throughout the run-up to the reinsurance renewal season, the story has been the same: Terror accumulations are growing, but they’re still manageable. After the renewal? Well, that’s a different story. The industry will probably need to take a hard look at its terror accumulations.
It’s tempting, of course, to point to the high-profile terror attacks of the past 12 months, not to mention the concentration of activity that occurred over the summer of 2016. While they’re tragic for those affected—and make the industry take notice—the lack of physical property damage hasn’t driven significant capital management risk. Sure, terror activity of any kind makes you think about what’s in your book, but there’s a difference between a minor event with limited casualties (let alone physical damage) and one that causes massive industry losses.
The real problem is that terror has been creeping its way into global property catastrophe treaties, thanks to soft market conditions. Bit by bit, it may be tolerable, but over time, it can lead to significant exposure that needs to be hedged. And despite the ample capacity in the market and belief that there’s plenty of traditional capacity available, two things are clear.
terror, industry, loss, market, global, risk, insurance, aggregation, ILWs, ILS