The three Cs that will reshape the industry

“Cyber will become one of the biggest risks that companies will need to manage.”

COVID, cyber, and climate—three small words beginning with C which could all, in completely different ways, have profound and enduring implications for this industry.

It is these we focus on in the May issue of Intelligent Insurer Review.

To take COVID-19 first, the implications are wide-ranging and probably long-lasting. We look specifically in this issue at how claims stemming from the pandemic may impact reinsurers. While high-profile court cases have offered primary insurers some clarity on this issue, the situation for reinsurers is less clear.

We speak to three experts about how this may play out. It is seems likely, but not certain, that negotiation as opposed to legal action will determine the outcome. As such, expect this to be a hot topic in the renewals when everything is on the table including, in a hard market such as this, tighter terms and conditions and higher prices.

Then there is cyber. Long the infant of the risk world in terms of premiums written, it is rapidly becoming a stormy and troublesome teenager, slamming doors and causing its parents to question their ability to manage such volatility.

There is yet another phase to come. As the world marches towards an increasingly interconnected future, cyber will become one of the biggest risks that companies will need to manage—and insurers will need to qualify, price and underwrite. This will mean a fundamental shifting of the portfolio mix for most insurers. So, forget the P&C business—add an extra C for cyber. Just imagine that.

Finally, climate change. OK, that has two Cs but each has an equally terrifying meaning for the industry. Climate change is a big deal for insurers for all sorts of reasons: it could well cause more natural catastrophes, and thus losses, but it will have a profound impact on the investments side of the balance sheet as well. In addition, it is becoming increasingly wrapped up in environmental, social, and corporate governance concerns of investors.

This means it is an issue that insurers need to understand better—now. As such, a number of models and frameworks have been released to help them. We speak to two companies that have done just this and discover what they are hoping to achieve.

Finally, look out for a fascinating interview with the chief executive officer of broker Miller in this issue. With new ownership comes new vision—and Miller wants to double its size in five years. That will raise eyebrows in the industry, but its chief is keen to explain why and how.

Wyn Jenkins is managing editor of the Newton Media insurance group

Image: shutterstock.com / Gorodenkoff

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