With one of the year’s biggest and busiest holiday’s approaching, and the likelihood of any possible COVID-19 vaccine easing the pressure in the near-future low, the next six-to-eight weeks are going to be vital in more accurately gauging what PCS’ Tom Johansmeyer expects to be a tough year for reinsurers.
Speaking during his Prospectus 2021 keynote, Johansmeyer used the Four Horsemen (the four figures in the Book of Revelation that symbolise the evils to come at the end of the world) to underline what he sees as the year’s greatest challenges for the industry.
“Even if we do see a vaccine by the end of the year, hurdles like further validation and distribution will not be easy to overcome,” he noted.
“We’re in the middle of the second wave; rapid expansion, broadening infection, and the next six to eight weeks are going to tell us a lot.”
Using the US an example, PCS’ Head Johansmeyer explained how Thanksgiving, Christmas and New Years Eve will combine with the holiday retail season and seasonally colder climates and set the foundations for 2021.
“So, COVID-19 is not going away anytime soon. [American physician and immunologist] Dr. Fauci in the US is saying Q2-Q3. The natural pessimist in me says maybe it’s take until early Q4 for things start looking a little bit better. But, that’s almost a year from now, let’s talk about right now, right.”
Following behind the COVID-19 global pandemic was the ultimate losses from this year’s Strikes, Riots and Civil Commotion (SRCC).
“The George Floyd riots were the largest SRCC event on record in the US for PCS, and we e all know that the underlying risk conditions haven’t gone anywhere. We’ve seen a lot of unrest in the US since the middle of June, we just haven’t seen the insured losses from it, and there are a number of reasons for that.”
He added that SRCC isn’t going away, despite a new president elect having been determined, and won’t for a while.
Johansmeyer included cyber as the third reinsurance risk of 2021 that won’t go away, describing ransomware and ransomwares for breach combos as having defined 2020 for this risk.
“There were a lot of big ransoms demanded, there were a lot of big ransoms paid. And the concept of just paying the ransom, as a strategy for dealing with ransomware, pretty much tripped itself up in 2020.”
At number four, Johansmeyer added the oldest and most well worn of risks to the reinsurance industry to his list.
“Of course, you’ve got natural catastrophes; The Fourth Horsemen. We’ve seen three major years in the peril markets around the world, if that’s not enough to have you paying close attention, I don’t know what would be.”
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