Reinsurers must use 1/1 renewal to tackle retro dislocation gap
The reinsurance industry needs to reinvent itself in the face of challenges: Peak Re CEO Hahn.
The reinsurance industry “needs to reinvent itself” in the face of challenges from raging inflation to recurring record natural catastrophes and must use the 1/1 renewals to start narrowing the dislocation between the retro markets, capital markets and reinsurance.
That is the view of Franz Hahn, chief executive officer of Peak Re.
He told SIRC Today that inflation alone represents a huge challenge for the market, the type of which it hasn’t seen for some 25 years. Reinsurers must tackle this on both sides of the balance sheet, he said.
“On the investment side, portfolios need to adjust to benefit from changes in investment opportunities. On the underwriting side, however, this means stress, because of inflation on the losses,” he said.
The other big issue, which affects Asia and the rest of the world, centres around the increasing frequency and severity of natural catastrophes.
“Before 2016 or 2017 we had a couple of years that didn’t show very strong natural catastrophes. Since then, we seem to be going from one record year to another. It’s obvious this is closely linked to global warming. So the reinsurance industry as a whole needs to reinvent itself,” Hahn said.
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A sneak preview: more exclusive content and interviews inside
We all face ‘a new era of risk and fragility’, says Tan
The outlook remains positive because Asia will continue to urbanise at a pace that is faster in Asia than in many other locations: Singapore minister Tan.
Delegates at the 18th Singapore International Reinsurance Conference (SIRC) were told we all face “a new era of risk and fragility” just as we are trying to build back from rising claims and challenges arising from COVID-19.
That was a key message from Alvin Tan, Minister of State, Ministry of Trade and Industry and Ministry of Culture, Community and Youth, Government of the Republic of Singapore, in the event’s opening keynote speech.
As he welcomed delegates, he stressed that it had not always been certain that SIRC would take place as a physical event this year as the world was being affected by a “polycrisis”—a multitude of crises now converging together.
He mentioned the Russian/Ukraine war, which has resulted in food, commodity and energy shortages, and that soaring inflation, higher for longer, may push several economies into recession.
“Nat cat continues to increase in both frequency and severity, with events such as Hurricane Ian, the Pakistan floods or the fires in Europe causing unpresented catastrophic and economic challenges and damage and challenging current modelling assumptions.
“The overall impact of these developments on the reinsurance industry has so far been mixed.”
