In an interview with the Financial Times (FT), Michael Steel, General Manager of Moody’s RMS, suggested that a combination of better analysis, new forms of loss prevention and higher prices should encourage reinsurers to take more risk amid the allure to pull from cat-exposed areas.
In the FT interview, Steel noted that the insurance industry must resist the temptation to retreat from cat-exposed areas, adding that it instead has to step up and devise a system that works.
Reinsurers have suffered years of high losses from property cat reinsurance, with some recently seeking to limit their exposure by demanding higher prices and for insurers to retain more risk, or by simply pulling from the risk altogether.
2022 alone has been a difficult year for many firms, with French reinsurer SCOR reporting a net loss of €301 million for the full year 2022, citing catastrophes such as Hurricane Ian and the hailstorms in France as key drivers.
According to Steel, the areas that are blighted by natural disasters will only worsen with factors such as climate change.
Though despite the situation, he noted that “It’s too pessimistic to give up the game and say it is too difficult to insure [these areas].”
“It would be a really sad state of affairs if we actually all throw up our hands and say we are just going to leave it to the state to deal with.”
He continued, “The insurance industry should not simply retreat from areas increasingly impacted by extreme weather.
“Instead, it needs to meet the challenge and innovate – as it always does, to use the latest technology and insights to devise appropriate insurance systems and ensure we do not withdraw coverage and leave uninsured areas stranded.”
Steel holds over three decades of experience in the risk and capital management industry and has been at Moody’s RMS since 2016.
He was appointed to the role of General Manager in April of 2022, succeeding Karen White.
Before Moody’s RMS, Steel served as the Group Chief Risk Officer at AXIS Capital, following a career in reinsurance broking, including 12 years at Benfield, later Aon Benfield and now Aon Reinsurance Solutions.
