Opinion | The Very Real Threat of CAT Losses; and What Carriers and Brokers Can Do

By: | June 17, 2019

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected]

The message from carrier and brokerage executives during our interviews at RIMS was clear: Big CAT losses in 2017 and 2018, coupled with shaky auto and general liability lines performance, are forcing insurance companies to reevaluate their businesses.

This is coming at a time when emergent risk, cyber being a prime example, is demanding that providers of risk capital be more creative than ever.

It’s not an easy position to be in, prompting one executive to reference that barometer of high intelligence, being able to hold two divergent viewpoints in mind at the same time.

Given the difficulties this inflection point presents, carriers, brokers and their risk management partners are reminded that, as always, it’s the relationship that matters.

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How to mitigate risk is becoming something of a muddle; as if it were ever clear!

But it’s the carrier and broker partners that have been with the insured through thick and thin that might be in the best position to evaluate a business and provide it good counsel, despite all the new capital that is clamoring for a seat at the table.

That’s the good news; there is plenty of risk transfer capital out there.

The “bad” news is that it may have alligator arms, with some carriers hesitant to lay out big lines at a time of so much uncertainty.

All of this may well contribute to an ever widening gap between losses and insured losses, an economic trend that I don’t think anyone has a solution to at this point in time. &

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The R&I Editorial Team can be reached at [email protected]