With the insurance market constantly changing and growing concerns around climate change, geopolitical issues and new technologies, the industry needs to think more about what could happen if there was no access to insurance, Risk Strategies’ John Mina highlighted in a recent interview with Reinsurance News.
“It is important to think about where the industry is going for the next five to ten years and beyond. But it is also highly relevant to advise clients on what could happen if you can’t have insurance. How do you protect yourself?” said the CEO.
He continued: “This goes beyond the role of insurance as a vehicle to transfer risk, I believe we have to think more broadly about risk in all its forms. How do we retain and manage it? How do we avoid it? And where the industry is going.
“The insurance industry is currently going through a hard market, which is expected to continue into 2024. In addition to this challenge, a number of insurers are retracting from different spaces, either from specific geographies or different classes of business, and have concerns around climate change.”
As insurers retract from those spaces, it leaves clients with fewer and fewer options, Mina noted. Additionally, this hard market is unlike any others, he highlighted.
He explained: “Historically, new capital comes into the industry replenishing it, and then rates come back down and there is a resurgence. But that isn’t happening this time. The current hard market is longer than the previous ones, and we don’t see as much new capital coming into the business.
“The vacuum effect isn’t being filled as rapidly as it historically was. That’s when I say to clients that now is the time when we have to start thinking about what happens if you cannot get enough insurance. Therefore, we think we need to look at every option.”
Mina has observed that captives have become a big part of their business. In fact, 10% of Risk Strategies’ business is in the captive space, and it’s currently the company’s fastest growing segment in terms of overall organic growth.
This, believes Mina, is a clear sign that clients are looking for solutions outside of the traditional risk transfer insurance market.
“Clients are looking at a variety of options to retain risk and manage it, as well as how to provide for their long-term future. I think we need to ask: What do we think about the future of insurance? Especially if insurers are less willing to lean into some of these spaces,” Mina stated.
“We need to be vigilant and ensure that we’re finding solutions to provide our clients with insurance that works for them and that can support business. Without insurance nothing happens, nothing flies, nothing floats, and nothing is built or invested or experimented in.
“Our business is really everybody else’s business. The world around us is evolving so quickly, whether it’s technology or legislation or politics; the world is not becoming any less risky. I think there’s a lot of value that we can continue to provide for years to come, but we need to make sure that we’re constantly evolving as well.”
