David Priebe, Chairman of reinsurance broker Guy Carpenter, has asserted that the reinsurance industry is “truly changing” in response to the multitude of challenges it has faced this year.
Currently speaking as part of an ongoing virtual media briefing on ‘Materializing Possibilities’, the GC Chairman stressed that the reinsurance industry must “continue to demonstrate its resilience and innovation” as it braces for unprecedented headwinds.
“We’ve been saying for years that our environment is changing,” Priebe said in a direct address to listeners of the briefing.
“However, this year it seems to ring more true than it has in decades,” he added. “The environment is truly changing … it is happening across multiple fronts – climate, economic, social, geopolitical, and the list goes on,” he continued.
“If the insurance industry is to have a seat at the table and make an impact at such momentous times … we need a focused outlook based on thoughtful collective data driven strategies to employ and engage as we deliver solutions for the near term, while also keeping an eye on the longer term horizon.”
Among the main challenges highlighted by Guy Carpenter leaders were rising interest rates, the impact of the Russia-Ukraine war, rising energy prices, and the potential threat of systemic risks such as climate change and cyber.
Against this backdrop, GC President and CEO Dean Klisura forecast that the 1/1 renewals in 2023 will continue to present difficult conditions for clients, with ongoing capacity constraints expected across the property and retrocession markets.
Yet despite these challenges, Klisura also noted that “demand for strategic advice and solutions never been greater” for his company.
And Priebe added that a firming cycle that now extends for 19 consecutive quarters has put the industry on “stronger footing” to deal with these emerging challenges, while many firms have also shown increased disciple and more discerning loss-picks.
“As the environment remains uncertain and ever changing, insurers and reinsurers alike are being strategic,” he told viewers of the briefing. “The business they are taking on, they are carefully evaluating the corresponding risk before assuming it.”
He further noted that the COVID pandemic has propelled conversations on systemic risk – previously in the background – on to the center stage, and stressed that these risks “cannot be left solely to governments to resolve.”
Part of the solution to these challenges, according to the Guy Carpenter leaders, is the implementation of new approaches to re/insurance that prioritize risk mitigation and community awareness efforts, which Priebe says will “ultimately reduce expected losses and hence improve insurance affordability, and community pickup.”
“To solve our most complex challenges we must go beyond the typical reinsurance offering,” Priebe concluded. “At Guy Carpenter we acknowledge and embrace the role of our sector in this ever changing world of risk. We provide critical mechanisms for recovery when they are needed post-loss, but we also shouldn’t overlook our ability to research, innovate and define policy. That creates a better approach before losses happen.”
