Speaking to A.M. BestTV at the RMS Exceedance 2017 conference, insurers and risk modelers said risk professionals are shifting their focus to emphasize risk reduction as part of a more comprehensive insurance cover plan.
Robert Muir Wood, RMS, said the future of insurance was in “how you combine risk reduction and risk transfer together,” he added “I’m very interested in linking insurance mechanism with mechanisms that reduce risk, I think that’s the future.
“I think there’s lots of interesting developments you’ll see in the next five years in that area.”
Wood added that insurers would have to take a more active role in promoting the understanding of risks, as “the viability of insurance is linked to the fact that the society from which its operating is really on top of its risks,” so there had to be “a risk culture there” for appropriate insurance coverage.
Tim Ritchison, from the California Earthquake Authority, said the state was developing resilience through proactive programmes for retrofitting of older homes in California, “these are older homes, these are homes that are more susceptible to earthquake damage, if we can get these homes retrofitted the community will have a much better chance at resiliency than if they did not.”
Other industry experts, speaking to A.M. Best at the conference, commented re/insurance should rewrite its position in the market space with the mission and purpose of ensuring a more resilient society by linking insurance with mechanisms that reduce risk and investigating ways of combining risk reduction with risk transfer.
And with re/insurance giants like Lloyd’s of London recently highlighting the need for the public and private sector to collaborate to focus on resilience, it appears the industry is already jumping aboard the shift towards a comprehensive, resilient risk transfer approach.