Preparing for economic turbulence: Swiss Re’s Ojeisekhoba
The last three years have seen multiple economic shocks from the COVID-19 pandemic to supply chain issues, from inflation to the first European war in decades. The world’s economy is under strain in 2022 with potential recessions predicted in major economies. But all these things prove how a reinsurer’s job is to assess the unforeseeable.
That is according to Swiss Re’s Moses Ojeisekhoba (pictured), chief executive officer, reinsurance, who spoke to Intelligent Insurer about all these issues as well as the talking point that will be top of the agenda at this year’s Rendez-Vous: the hard (or hardening) market. Though a common term, it is not one that Ojeisekhoba likes.
“I don’t like the terms ‘hard’ or ‘hardening’ market,” he said. “I tend to think about the risk itself and what we need to do to ensure that we attach the right premium to that exposure or the risks that are being taken by the overall industry.”
Ojeisekhoba pointed to a time four or five years ago when there was far more exposure in North American commercial auto than the premiums being charged. This, he said, led to a point when insurers had to make adjustments that ensured the premiums charged reflected the exposure. That exposure was itself being driven by a combination of the frequency and severity of losses.
“You’ve seen that trend carry on into the shorter-tail lines, specialty lines, property. As we entered 2021/2022, there’s been a need for rate increases, driven by the greater incidence of climate change and especially around secondary perils, that match up with the exposure. We’ve seen that translate into the reinsurance market.
“That’s all exacerbated by the inflationary pressure and other macroeconomic factors such as supply chain issues and the geopolitical fallout from the war in Ukraine,” Ojeisekhoba explained.
Another factor dominating conversation in recent weeks has been the scale of P&C losses in the first half of 2022. The sense of that period, Ojeisekhoba admitted, is that it has been “turbulent”.
“The net income comes from a combination of technical results alongside investment results. It’s clearly been turbulent in the first half of the year from a financial market standpoint. In terms of how assets have performed, there has been a significant drop,” he said.
