PwC Insurance Summit: Reinsurers grappling with heightened geopolitical risk

November 13, 2023

Hamilton, Bermuda - Geopolitical risk is an increasing concern for reinsurers, the PwC Insurance Summit heard. The hard market and Bermuda’s critical role in the global insurance industry were other key topics dominating discussions at Bermuda’s flagship re/insurance industry event on 9 November, presented with the Financial Times. The event featured a line-up for industry leaders including Kevin O’Donnell, President and Chief Executive Officer, RenaissanceRe Holdings, and Eric Andersen, President, Aon.

Arthur Wightman, PwC Bermuda, Territory and Insurance leader, said, "For the first time in a very long time reinsurers are having to deal with geopolitical risks – and that adds a whole layer of extra complexity that we haven’t seen before, and needs to be factored into the strategic decision-making of companies. Right from the boards and all the way through the organisation, there needs to be an additional layer of focus on these emerging risks, and particularly the dynamics in different parts of the world and how they’re emerging.”

He added: “The Bermuda market plays an outsized hand in responding to geopolitical and other growing global risks including cyber, and climate – responding to catastrophic events has always been part of the DNA of Bermuda.”

Bermuda makes up around 36% of the global reinsurance market, and is the largest supplier of catastrophe reinsurance to U-S insurers, he noted.

Reducing the cyclical nature of the re/insurance market was another focus of discussions at the Summit. After failing to earn their cost of capital in the last five years out of six, reinsurers have finally started to drive through significant price increases as they respond to rising inflation and substantial natural catastrophe and war-related claims.

Speaking at the Summit, attended by nearly 300 industry professionals from over 50 different re/insurers and other organisations, Jim Bichard, PwC’s Global Insurance Leader, weighed in on the question of how long the hard market was going to last.

“There is no doubt about it that we are in a very hard market at the moment,” he said. “There is a pretty good consensus that this coming renewals season is going to be very strong – and many factors impact that.”

He added: “I have had quite a few people say to me this isn’t a hard market for reinsurance – this is just the new normal.”

Bichard was moderating the session, Dialogue: Reinsurers Set the Pace, but for How Long? with Christian Dunleavy, Group Chief Underwriting Officer, Aspen, Scott Egan, Chief Executive Officer, SiriusPoint, and Laura Taylor, President, Nephila Holdings.

Reflecting on the discussions, Matt Britten, Partner - Insurance, PwC Bermuda, said: “We heard about the need for the industry to be more ambitious in meeting demand for coverage, and not to walk away from risk – nor to consider certain risks as uninsurable – but instead to address the change in the probability of risk, drive clarity on coverage, and better define who are the best owners of risk throughout the risk chain.

“We also heard a lot about the rapid evolution of the risk environment – and how sustainability, economic, geopolitical and social risks are all becoming more correlated. In closing the protection gap around these risks, the industry needs to also help close the knowledge gap around both risk and the critical role that insurance plays.”

The day’s full agenda can be found here.

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