Kate Mead, Senior Vice President – Carrier Management & Head of Property & Casualty Broking (Canada), Willis Towers Watson
One of the major lessons from 2021 is that data-driven risk management is the new normal. While we appreciate the qualitative considerations in underwriting, we need to drive a more sophisticated and quantitative underwriting process.
The industry needs to improve upon predictive modelling capabilities in light of global challenges, such as climate change and natural catastrophic events. We have to build adaptable models to deal with a range of emerging risks and prepare for the next Black Swan. In the last 18 months, the industry has had to deal with the pandemic, supply chain management challenges, inflation and heightened concern over cyber threats.
In response, the industry pushed the boundaries of insurance policies to evolve and morph reactively to changing risk profiles. But there are gaps and unintended coverage consequences that did not exist 10-plus years ago when we were evaluating risk through a different lens.
We need to re-evaluate how policies – such as professional liability, cyber, executive risk, property/bodily injury and general liability – overlap.
And once we’ve reached the outer limits of where conventional insurance can go, we have to acknowledge that not everything is insurable. We may not be able to buy enough capacity for certain risks, or any capacity in some cases.
We must find a way to utilize insurance along with other risk-management remedies and alternative risk transfer and financing schemes. There will also be greater pressure on clients to introduce new physical risk-mitigation controls and embed more sophisticated security controls into their operations, certainly as it relates to cyber liability. The insurance industry simply won’t be able to build a sustainable book otherwise.
With respect to the environment, we are dealing with a number of carriers who have taken a conservative stance on where they are going to invest (or not invest) their capacity in the fossil fuel space. I suspect we may see even stronger positions by carriers in those spaces in 2022.