The insurance industry needs to capitalize on its unique risk understanding to reduce the financial burden on governments in light of “the daunting scale of the protection gap,” Nick Frankland, CEO of EMEA operations for Guy Carpenter & Company, LLC, said at the Reinsurance Symposium in Baden-Baden Sunday.
“The protection gap presents a great opportunity for the insurance and reinsurance industry and it extends far beyond the catastrophe segment,” Frankland emphasized in his opening remarks for the symposium, hosted by Guy Carpenter, a wholly owned subsidiary of Marsh & McLennan Companies.
The theme of this year’s symposium was “Bridging the Gap – Is the industry doing enough to attract risk from the public to the private sector?”
Although some risks are very complex or little understood, Frankland pointed out, “today we have a better understanding of risk than at any time in history. We have better science, data and analytics and tools to understand, measure and price risk.”
It is now time to shift the focus from climate change to ecological change, and to share information in a bid to drive resilience, Emmett Soldati, chief product officer at Weather Analytics, said during his presentation.
“The key to resilience – which is not simply about insuring against and recovering after losses, but is also about protecting and mitigating against those losses – is to recognize that information, and the transfer of that information down to the local level is central to our ability to respond to this change,” Soldati maintained.
“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 argued.
Brendan McCafferty, CEO of Flood Re in the United Kingdom, suggested during his presentation that the program – which has taken the concept of national catastrophe pools and created a solution – illustrates “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.”
Noted McCafferty, “Complex and sensitive issues can be dealt with when policymakers are open-minded to innovative solutions.”
“The role insurance plays as a partner to governments and public sector entities is building, particularly when it comes to providing intelligent contingency financing for catastrophe events,” Martyn Parker, chairman of global partnerships at Swiss Re, said during his presentation.
“Strong insurance penetrations and resilience planning allows the quickest economic recovery post-disaster – that’s attractive to investors and businesses,” Parker said.
Chris Klein, head of EMEA strategy management at Guy Carpenter, pointed out that public/private partnerships are of mutual benefit to all parties. “Everyone wins when we work together to provide effective solutions to the public sector,” Klein emphasized.