We welcome more talk of partnerships but discourage any talking up of a market that is harsher than can be justified. Sharp oscillations are bad news for all stakeholders, and poor communication and last-minute decisions have no place in the market.
Systemic risk will drive a greater risk-based focus in the insurance industry. We live in a complex and connected world, and the velocity of change is increasing, but the world hasn’t yet experienced a worse-case systemic risk scenario.
The pandemic is one of the largest catastrophes experienced by man, and there are some estimates that pandemic-related losses might ultimately cost the insurance industry up to $100 billion. It’s clear that the insurance industry cannot be expected to provide financial protection for a worse-case event or shoulder the full extent of systemic risks.
However, the industry has a wealth of smart people with knowledge and experience that can be harnessed to help risk professionals better understand the DNA of systemic risks, and provide risk-based thinking and interventions. There’s talk of the value of public and private partnerships to help us all think better and differently. Let’s turn that talk into action!
So please, no going back to the old days of extreme fluctuations. Let’s see some evidence of green shoots, rather than leaves that have fallen in autumn, and say hello to improved stability and negotiations driven by risk, not market forces.