SCOR’s Kessler confident that tailwinds will accelerate

The insurance industry has a bright future—if it uses the capacity available to it to increase insurance coverage and reduce the protection gap, Denis Kessler, CEO of SCOR, said during a presentation at the 2018 Monte Carlo Rendez-Vous.

“We see a higher demand for risk cover and an immense protection gap to be filled around the world,” Kessler said.

“People are underinsured. It’s fantastic for the industry that it has the capacity to enlarge the business because the demand is not saturated.”

He offered the floods in Texas in 2017 as an example. The economy of the city of Houston, Texas, could lose up to $60 billion of its gross domestic product output in the next year as a result of floods in the wake of Hurricane Harvey, according to the Centre for Risk Studies at the Cambridge Judge Business School.

Only a minor portion of the economic losses caused by the floods was insured, Kessler noted. The protection gap exists in developed countries as well as developing countries, he said.

Another positive development is that interest rates are starting to rise, improving the outlook for returns on investment, Kessler suggested.

The erosion of rates has also stopped and interest rates are rising, he noted.

“We had two negative cycles for more than six years. The cycles are now reverting. SCOR is confident that the tailwinds the industry is enjoying are going to accelerate.”