Guy Carpenter recently published insights on the critical issues shaping the reinsurance industry to coincide with the 2020 APCIA Annual Meeting. Topics covered in the articles center around the changing nature of risk, specifically the evolving landscape for cyber, wildfire and broader casualty risks. The Changing Nature of Risk: There is an old adage that “adversity builds character.” However, before adversity builds character, it reveals character, and the numerous catastrophes that have occurred over the last several years combined with the ongoing pandemic have clearly revealed the character of the insurance industry, according to John Trace, CEO, North America, Guy Carpenter, and Jay Dhru, Global Head of Business Intelligence, Guy Carpenter.
Why 2020 Has Made the Ever-Evolving Cyber Landscape Even More Dynamic:
The insurability of systemic cyber risk will be one of the defining issues of the next decade for the (re)insurance sector. Rapid technological changes and digitalization in particular have already transformed the characteristics of risks assumed by the (re)insurance market, according to Guy Carpenter colleagues Will Garland, President, Centers of Excellence, and Erica Davis, North America Cyber Center of Excellence Leader, Guy Carpenter.
The Changing Nature of Risk - Casualty Dynamics:
History shows that the insurance market is cyclical, and this is especially true for casualty lines of business. As long-tail lines, the ultimate profitability of a year is not known for many years as changing loss trends and causes may not be recognized until it is too late to protect against adverse development. The casualty marketplace now finds itself in such a position, according to Christopher Ross, Managing Director, Guy Carpenter.
Wildfire - Understanding and Modeling the Risk:
A confluence of excessive heat and lack of precipitation has led to a dangerous wildfire situation in the western United States. The ability to understand the underlying risk and to model potential exposures will be key to risk management and underwriting decisions moving forward, according to Alexander Van Dijk, President U.S. Branches, and Kimberly Roberts, North America Peril Advisory, Guy Carpenter.
Risk-Based Capital Stress Testing in Today's Environment:
As companies continue to navigate the repercussions of the COVID-19 pandemic, it is important that they understand the pandemic’s impact on risk-based capital (RBC). Insurers are dealing with COVID-19’s effects on assets and liabilities, both of which can affect capital levels, according to Robert Lumia, Senior Vice President, and David Domino, President, U.S. Segments, Guy Carpenter. This article provides readers insights into how the current environment has impacted capital levels and how rating agencies may view a company’s ability to withstand market volatility.