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Sep 2020

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What's in a name?

Source: Asia Insurance Review | Feb 2020

There was a time, not so long ago, when people would talk about illness – and health insurers would sell policies to protect people against the cost of falling ill.
 
But then some smart marketer decided that ‘illness’ was a bit too glass-half-empty and renamed it ‘wellness’ in a fit of glass-half-full optimism. As a concept, wellness had the added benefit that it could be used to include all sorts of sibylline lifestyle concepts ranging from breath coaching, gym membership, sitting down versus standing up, taking the stairs instead of the lift - through to buying fitness trackers, wearing Lycra athleisure wear and eating quinoa and kale.
 
And that was all OK because everyone already knew that the switch from illness to wellness was all about marketing. After all, the wellness industry is worth well over $4tn according to the Global Wellness Institute – although only a fraction of that feeds through into health insurance.
 
Much more sinister, however, was the renaming of the scourge of ‘global warming’ to ‘climate change’. While the former sounds quite alarming, the latter sounds a bit like changing the settings on the car’s AC because the occupant of the passenger seat is feeling a bit chilly.
 
Full marks, therefore, to Asian School of the Environment, Nanyang Technological University Singapore chair Professor Benjamin Horton who urged delegates at last year’s SIRC to stop talking about ‘climate change’ and start talking about ‘climate crisis’.
 
And what a crisis it is.
 
At the start of this year Asia was reeling from the twin disasters of bushfires in Australia and floods in Jakarta – providing further proof, if any more were needed, that this region needs to get used to the idea of some sort of weather-related crisis on a weekly basis.
 
The Asia-Pacific Disaster Report for 2019 published by the Economic and Social Council of the United Nations said that almost half of the 281 natural disaster events worldwide occurred in the Asia Pacific region. 
 
That’s almost three natural disaster every week in the Asia Pacific alone – which is one of the reasons that Professor Horton is keen that we adopt language that more fully captures how serious things have become. 
 
The word crisis ceases to seem alarmist in this context.
 
Which brings me neatly on to my final point about naming conventions and how they are used in the reinsurance industry. 
 
There is, perhaps, a tendency to talk blithely about Nat CAT as a category of business that needs to be priced rather than focusing on the underlying source of the business – the natural catastrophes themselves and what they mean to real people in real families with real homes and real businesses.
 
There is a growing body of compelling evidence that suggests that many of the catastrophes that we are referring to are anything but natural. Many are looking distressingly man-made – and to continue to refer to them as Nat CAT looks, at best, disingenuous and, at worst, dishonest.
 
So perhaps in future reinsurers should have two distinct categories of catastrophe. One which is genuinely Nat CAT – comprised of earthquakes, volcanic activity and tsunamis – and the other is Man CAT – comprised of weather-related events occasioned by mankind’s profligate consumption of fossil fuels. A 
 
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