NEWS

The talent to innovate

The industry has a mandate to examine what it can do differently to tackle the issue of climate change, says BMS Re CEO.

Inflation is not going to go away, so the issue facing the re/insurance industry is how to contain it. That is the view of Pete Chandler, president and chief executive officer of BMS Re. Factor in climate change, and the industry is pressed to find new solutions—but Chandler believes it has the talent to achieve these.

“Inflation has always been here—medical and social inflation as well—I don’t think they ever went away,” he said. “A very popular term was used a year ago—that inflation was going to be transitory. It’s permanent: wages are increasing, real estate values are increasing, the cost of goods sold is increasing.

“In the US, they strive to keep inflation at around 2 percent, and now it’s running north of 8 or 9 percent. The question is, can we temper it, can we contain it, and can society contain it?”

BMS Re’s focus is on the middle market, regional, mutual, and specialty reinsurance space. Chandler said conversations at Monte Carlo have revolved around inflation and also property-cat capacity, inflation, climate change, and new capital coming into the marketplace.

“Conversations are about what everybody is going to do come January 1, because it’s going to be a challenge,” he said. “It’s going to be different from the past. We expect the demand for capacity to exceed the supply of traditional reinsurance, so we’re talking a lot more about structured covers, ILWs, cat bonds, ILS capacity.

“That’s our job as brokers: we will leave no stone unturned in trying to find efficient capital for our clients and our prospects.”

Climate change brings additional challenges, and Chandler believes the industry has a mandate to examine what it can do differently to tackle the issue.

“We have to think about the impact the industry has on society.”
Pete Chandler, BMS Re

“We can’t just throw money at it and think we’re going to help climate change—that’s not going to work,” he said. “We have to be more thoughtful, we have to think about the impact the industry has on society and what that means for the climate.

“There’s no book we can turn to for the answers. We’re authoring this book as we go. We have so many intelligent individuals and organisations that are putting a lot of their weight and their mental acuity into this subject. We’re just getting started.

“We need to figure out exactly where the climate change problems reside and find the things we can control, and where we can, through our actions and through our products, try to make the world a better place tomorrow than it is today.”

Chandler noted insurtech’s impact on efficiency, and—factoring in the impact of the COVID-19 lockdowns—the move towards hybrid working, plus the trend for underwriters to move out of bricks and mortar insurance companies entirely to launch their own managing general agencies, as exciting trends.

“The evolution is fascinating, and the move to E&S paper from admitted paper—that freedom of rate and form—is fascinating because ours is not an industry that has historically moved very rapidly,” he said.

“What’s exciting to me is seeing the pace and the quantum of change. That’s great for our industry. It’s making us better tomorrow than we are today at the business of insurance and reinsurance,” he concluded.

Main image: Shutterstock / ESB Professional