01/23/2024
The Paragon Rider Monthly Round-Up
What’d you miss? Don’t fret. The Paragon Rider, our round-up of notable items from the insurance industry over the past month, has you covered.
Climate Chaos
The United Nations climate summit set the tone at year-end, with world leaders calling for urgent action to slow global warming against a backdrop of two major wars and rising global temperatures. King Charles III challenged the Dubai crowd to take “genuine transformational action” to curb greenhouse gas emissions.
Of course, many in the insurance business have been sounding the alarm for a while now and ramped it up ahead of #COP28. Munich Re‘s Ernst Rauch says the industry isn’t nearly as prepared for the pace of climate change as it should be.
“What can be looked at with a critical eye is that the momentum of action has been far too slow,” the company’s chief meteorologist was quoted as saying in Reinsurance News. He added that one of the great things about the annual climate conference is that it brings together some 200 leaders from around the world to agree climate change is a manmade problem.
Speaking of volatile weather, the 2023 Atlantic #hurricane season saw 20 named storms, the fourth most since 1950, the NOAA: National Oceanic & Atmospheric Administration said. An average season has 14. Still, it was a relatively mellow stretch, considering Hurricane Idalia was the only one to make landfall.
Looking back on 2023, BMS Group found worldwide insurance industry losses to be below the $133 billion modeled average suggested by Verisk. While some losses are still developing, like the recent severe weather and flooding in Australia and winter storms in the U.S., overall, BMS highlighted how it appears that the U.S. insurance industry losses will end up below $65 billion across all perils.
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Merger Mania?
Peter Blanc ACII, head of M&A at Howden Group, doesn’t see the pace of brokerage M&A slowing any time soon. “Howden is now the 12th biggest broker in the world, but the 11 that are bigger than us are all in the U.S., and half of those are private equity-backed and only in the U.S.,” he explained. “We see trends with U.S. brokers inevitably coming to Europe. We see lots of U.K. consolidators looking to Europe and in every country around the world.”
All the uncertainty is reflected in the number of sovereign debt downgrades (43!!!) we’ve seen this year in the face of high inflation and rising global interest rates. This trend has heightened concerns about countries’ debt management capabilities. In response to growing concerns over global public finances, there is an increased demand for contract frustration insurance, particularly in regions witnessing economic uncertainties and political instability, Chaucer Group noted.
Tech, tech and… more tech
Needless to say, tech is critical for our industry moving forward. Prudential‘s Michael Estep, as reported by The Rough Notes Company, Inc., says that a more personalized experience, courtesy of the leaps and bounds in the tech, are part of his company’s long-term strategy. “The goal is to better understand customers and proactively offer solutions that are tailored to their needs,” he said. “Younger generations are making up a larger portion of the workforce. AI and technology tools are giving us insights about these customers that we didn’t have before. This helps us ensure that we are providing them with the right experience.”
To foster such innovation going forward, execs need to allow for a culture of “psychological safety,” according to SCOR‘s Al Mele, who recently offered up his view in an article for Carrier Management. “The people who are closest to the work, yet distanced from a company’s leadership authority, need to feel safe bringing up issues and obstacles,” he said. “Unfortunately, the voices best qualified to propose and implement efficient and effective solutions to business challenges often fall silent when met with the fear of rejection or criticism.”
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