Insurers and reinsurers should capitalise on their unique risk understanding and work to reduce the protection gap, said Mr Nick Frankland, CEO of EMEA Operations, Guy Carpenter, at the Reinsurance Symposium in Baden-Baden which is hosted by Guy Carpenter & Company, LLC, for the eighth year.
With the theme of “Bridging the Gap – Is the industry doing enough to attract risk from the public to the private sector?”, Mr Frankland outlined the daunting scale of the protection gap and said: “The protection gap presents a great opportunity for the insurance and reinsurance industry and it extends far beyond the catastrophe segment. There are challenges of new risks in other areas including technology, science, medicine, climate change, population growth, food security and urbanisation.”
Highlighting the need to shift the focus from climate change to ecological change, Mr Emmett Soldati, Chief Product Officer at Weather Analytics, addressed the key role played by information, and the sharing of that information, in driving resilience.
“We need to move beyond the debate about how the climate is changing and what is causing this, and instead focus on ecological change. Ecological change highlights the other side of the climate equation – geography, technology, and human behaviour – and puts it in context where it matters when we think about perils and hazards; because at the end of the day all risk is local,” he said.
“We need to empower local actors – be they policyholders, municipalities or brokers – with better information to be able to respond. This is how we can work together to close the gap,” he added.
Collaboration between industry and the government
Mr Brendan McCafferty, CEO of Flood Re, said Flood Re is a successful working example of how risk transfer from Government and the retail insurance sector to the global reinsurance markets can underpin the delivery of an insurance solution for hundreds of thousands of consumers in need of insurance protection.
“Flood Re has taken the concept of national catastrophe pools and created a solution that benefits policyholders every day, not just when the worst happens.”
Mr Martyn Parker, Chairman of Global Partnerships at Swiss Re, said ultimately insurance supports Governments to manage risk resilience and fiscal planning – enabling them to save lives and protect infrastructure, limiting damage to their entire economy. “Strong insurance penetrations and resilience planning allows the quickest economic recovery post disaster – that’s attractive to investors and businesses.”
Bringing the discussion to a close, Mr Chris Klein, Head of EMEA Strategy Management at Guy Carpenter, explained how public-private partnerships are of mutual benefit to all parties. He concluded: “Today, we have once again demonstrated how we can put capital to good use for the broader benefit of society. Everyone wins when we work together to provide effective solutions to the public sector.”