With climate change topping the list once again for PwC’s “Reinsurance Banana Skins” report, “it does not seem surprising” due to it being so dominant for all the major events that the industry has seen over the last 12 months, states Jim Bichard, Partner and Global Insurance Leader at PwC.
When Reinsurance News spoke to Bichard at the annual RVS event in Monte Carlo, Bichard explained that what is different this year however, is the frequency of events that are climate-related, as well as the fact that severity is taking place too.
“Reinsurers are getting hit from more angles than ever and the size of these events keeps increasing. That’s partly because of lost cost inflation which links into some of the other risks, but it’s also because the impact of climate change continues to be felt all over the world.”
This is clearly demonstrated following on from the record-breaking global heatwave in July 2023, which clearly shows how climate change has risen as a significant risk for reinsurers.
“The easy solution would be not to participate in as many deep layers of reinsurance because if there are frequency issues you can keep yourself above that, but that’s not an option – whole point of insurance is to provide protection.
“If reinsurers are trying to be relevant and have a purpose, then it’s much more about prevention as well as protection.”
He continued: “I think the solutions need to involve public–private partnerships, working with governments and state agencies and trying to make communities more resilient in the first place.
“Then also bringing on the technology and the data that we have in the industry to support the primary insurers and their customers to mitigate against the effects of climate change in the future.
“At the end of the day, we’ve got more data than any individual government or individual company to understand what the impacts will be.”
