Guy Carpenter’s newly launched Public Sector Specialty Practice staffed by global team

Global risk and reinsurance specialist Guy Carpenter & Company, LLC launched a specialty practice Monday focused exclusively on providing private sector solutions to relieve the cost of catastrophes on government entities.

Approximately 73% – or US$2.7 trillion – of natural catastrophe losses globally between 1970 and 2014 were uninsured, Guy Carpenter & Company, a wholly owned subsidiary of Marsh & McLennan Companies, notes in launching its new Public Sector Specialty Practice. The practice will address the specific and unique risk management needs of governmental agencies and entities.

Guy Carpenter reports that unfunded exposure to uninsured property, health, life and employment losses extends well beyond natural catastrophes and includes disasters stemming from man-made and other emerging risks. “The creation of private sector pre-financing options will not only relieve the burden on taxpayers and, in turn, public finances, but will migrate the management of these catastrophes to insurance and reinsurance companies where claims handling and risk management is core to their operations,” the statement adds.

Guy Carpenter points out that its Public Sector Specialty Practice currently advises about 100 public sector engagements that entail pre-event reinsurance mechanisms around the world that address loss causes, including earthquake, hurricane, flood and terrorism. The newly launched practice, however, will address the issue of unfunded liabilities by delivering reinsurance and capital market solutions, as well as supporting risk analytics that focus on this gap for governments and other public entities, the statement continues.

Governments and public entities are facing pressing challenges. For example, incidents in which public entities are expected to respond, despite fiscal constraints, include cyber attacks, infectious disease and environmental accidents.

“Given the increasing challenges associated with risk management and the impact that catastrophic loss can have on the fiscal position and tax base of government entities across the globe, we believe greater co-ordination is required to manage this risk across the public and private sectors,” Britt Newhouse, chairman of Guy Carpenter and chair of the Public Sector Specialty Practice, says in the statement.

“Guy Carpenter believes there is a growing need to build and expand effective public-private partnerships to more effectively manage the challenges associated with catastrophic loss because of the fiscal constraints brought on by unprecedented economic and budgetary burdens, including expanding public sector debt,” adds Jake Clark, managing director and leader of the firm’s Public Sector Practice in North America. “In many cases these represent unfunded loss exposures that fall on the backs of taxpayers or communities that lack the fiscal resources to efficiently manage them,” Clark notes.