9/29/2022 – Insurers’ risk appetite is changing, and for some sectors it is becoming more difficult to find adequate coverage, says Marsh expert Liliana Lapadatoni. On the contrary, companies are now also more critical when choosing an insurer. Moritz Finkelnburg, board member of the German BGV, reports on the growing political pressure to introduce compulsory insurance. And Ergo Austria boss Philipp Wassenberg says you have to think about product design, pricing, underwriting and claims management.
- Philipp Wassenberg (CEO Ergo Versicherung Austria), Liliana Lapadatoni (CEO Marsh Adria), Moritz Finkelnburg (BGV Board Member) and moderator Michael Fassnauer (CEO Ubimet) (from left to right; image: VJ/screenshot)
It can already be seen that the “appetite” of insurers is changing when it comes to assets exposed to high physical risk.
Liliana Lapadatoni, CEO of risk consultancy and insurance broker Marsh, Adria Region said Wednesday at a panel discussion on climate change as part of the Insurance Innovation Day in Vienna.
You examine each other
Some industries are already in the process of being “blacklisted” by insurers. “It is increasingly difficult for us to find competitive solutions for our clients” and to achieve an adequate risk transfer.
Marsh has also noticed movement on the client side, as Lapadatoni mentioned: Clients have started asking insurers to what extent they are addressing climate change, yes, ESG in general.
Therefore, it is not only verified by the insurer, but also by the client and a decision is made as to who they ultimately want to work with.
Policy and Mandatory Insurance
Moritz Finkelnburg, board member of the BGV-Versicherung AG, spoke in relation to climate change about the enormous effects of climate change due to rising temperatures and the accumulation of natural disasters.
However, most customers are not insured against extreme events. This increases the political pressure to introduce compulsory insurance. Looking at the calculation and the necessary capital that must be reserved for it, it is “a quite difficult situation”.
Wassenberg: Reinsurers have been “preaching” for almost 50 years
Philipp Wassenberg, CEO of Ergo Versicherung AG, should not be affected by the issue of climate change in the insurance industry in the way that he is now, because the reinsurers would have “preached” almost 50 years ago what will happen.
Especially in the last 20 years, when hurricanes and floods caused great damage, it became clear that “climate change is real” and that the models need to be adjusted. “The rise in reinsurance costs clearly shows what that means,” says Wassenberg.
Taxonomy has played an important role in changing the way of thinking in Europe. Also, today everyone talks about the effects of fossil fuels, unlike in the past when prices were still low.
There is “no doubt” that the models need to be adapted. It is important to think about product design, pricing, underwriting and claims management.
There are opportunities for insurers
For policyholders, the significant increase in weather risks means an equally large increase in the risk of pocketing the costs of major natural hazards. The insurance industry is failing to do justice to the real, potentially huge, need here.
However, this results in the opportunity to meet these same expectations, to protect the assets of policyholders, in the future. That means a lot of new business. If it were possible to pay policyholders’ premiums for risks like flooding, “that would be good news for everyone.”
Lapadatoni also says: The increasing severity and frequency of elemental events offer an opportunity to develop “new solutions.” New opportunities also arise in relation to transformation risks: new products, new technologies.
The question is whether the customer is willing to pay the price calculated by the insurers, Finkelnburg objected. Otherwise, a political discussion about compulsory insurance and possible state subsidies will follow. “That will be the typical but difficult question for years to come.”