News t is still too early to predict property- catastrophe rate decreases below negative 10


percent, according to one broker. While recognising that the market is due a


27.10.15 TUESDAY


Irrational soft rates but beware of new risks I


increase


rate decrease again this year, JLT Re’s global head of analytics, David Flandro, said that you can’t ignore what happened in the middle of the year when an evolving underwriting environment in the state of Florida contributed to increased demand for reinsurance at the margin. He said there were


three reasons why


decreases may not be as extreme as some market commentators are predicting. “First there is the slowing rate of third party


capital entry into the sector with cat bond issuance figures down year on year. Second, certain carriers, state-backed funds and pools did buy more limit mid-year. Finally, merger and acquisition (M&A) activity has affected around 8 percent of sector capital.” Flandro said that the sector may be entering


a period that bears some similarities to the challenging market of the late 1990s when some carriers wrote risks that they did not fully understand.


David Flandro


“In the late 1990s you had aggressive underwriting and people were having difficulty generating cash flow—an increasingly similar position to the one we see today—but it led to a liability crisis. “If you are in the business of underwriting you have to be very careful what you do,


for


example, with cyber.” Most insurers are still writing risks at sufficient


rates, he said, but some are entering the realm of the “known unknowns and unknown unknowns”


‘Broken’ industry must work to attract new generation: Duperreault


of it are “broken” as a result, Brian Duperreault, chief executive officer of Hamilton Insurance, told delegates at the PCI annual conference yesterday (Monday October 26). “We are in the age of analytics where currency


T


is data and code is king,” he said. “Our business is truly broken; disruption is here for a reason. We continue to make it painful and annoying for our customers.” Duperreault explained that the influx of


alternative capital and the consolidation this has triggered, in part, are two of the biggest reasons the marketplace is changing. “But is this M&A activity producing the insurance company of the future?” he asked.


he re/insurance industry is caught between analogue and digital worlds and large parts


Duperreault explained two keys to answering this question: alternative capital and the question of how companies define and differentiate themselves. He believes that alternative capital is here


to stay and re/insurers should embrace it while moving away from the traditional approach to risk-taking.


He also said companies should consider how


they define themselves and whether they are adding value. He explained that brokers should turn away from just processing data and ensuring they are trusted advisers, adding that they must “fix it or get out of the way”. A regular theme with Duperreault is that of


how to attract millennials to the re/insurance industry. He presented statistics showing that


www.intelligentinsurer.com | www.bermudareinsurancemagazine.com Brian Duperreault


within five years, there will be 400,000 open positions in the industry. Re/insurance, according to the executive,


has a terrible reputation with new graduates. He unveiled plans to attract this generation, with an insurance careers month to take place in February next year. “Insurance is career trifecta: it’s stable,


rewarding and limitless,” he said, and he plans to lead the charge of making the industry more attractive to a different generation. n


DAY 3: Tuesday October 27 2015 | PCI TODAY | 5


where the magnitude of how big a loss could get is very difficult to ascertain. “Cyber risk rates


and certain


players begin to write cyber but are the risks really understood? Having tools that can inform carriers about cyber and all the risks surrounding it is crucial,” said Flandro. He added that while it would not be impossible to


envision the market rates dropping by double digits, some segments of the market would be approaching “irrational” price levels if that came to pass. Meanwhile, Flandro said, the changing face


of terrorism risk is creating new requirements for terror models. “Terrorism is such a granular


risk and


therefore can be very challenging to model. It varies by region and type of attack. More data and better use of data are absolutely essential not just in where the risk lies but where actual events may happen and their effect. “Terrorism has always been an evolving risk.


It is becoming more granular and heterogeneous and will require a different kind of modelling. We are developing more creative covers and better ways to model terrorism.” n


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20