By Sharon Paterson, Chief Executive Officer – Infiniti Insurance Limited
Worldwide the insurance industry has been caught short on COVID, caught short on riots, and caught short on the Russia– Ukraine War; violent, disruptive happenings, catastrophic in nature and impact.
The world has changed and will never be the same again. Evolutionary new thinking is essential to address the significant challenges we face. There is more change on the horizon. Change is clearly the new normal. We must transform how we understand business, policy, and society to keep in step with our ever-changing environment. As an industry we need to be quicker to anticipate the effect of the challenges on the horizon and plan our mitigations to negatively affect our covers and clients as little as possible.
It is my submission that the insurance industry needs to evolve to get off the back foot, and this calls for transformation.
Transformation, not as a destination, but a state of mind in the approach to everyday business. Actualization in transformation is at the heart of how we lead, how we trade, how we manage, how we live and indeed – how we insure.
Caught short by war
The conflict between Russia and Ukraine had been brewing for some time, the region is volatile, plagued by geopolitical conflict and of significant importance in terms of world trade, food, and energy security to name but a few of the region’s strategic roles in the global context.
Worldwide for the insurance industry, this must be our moment for change and evolution. Deep but fast, transformational change is a fundamental requirement and needs to happen at the very core of the way Insurance does business. Cross-sectoral consultation, the gathering and sharing of intelligence, magnifying lenses on qualitative research begging renewed focus risk assessment forcibly transforming now.
One needs to question whether it is right to be looking at war as a regionalised event.
What do you think?
Will this war spread, and will we deal with that possibility only after the fact, as claims from other military invasions start to roll in?
What about the knock-on shock impacts of this war across Europe and indeed across the world?
Given the heightened geopolitical global climate, will war flare up in other regions and are we ready for this?
The impact of the Russia-Ukraine war on War cover and the claims that have had to be paid by the Aviation and Marine specialist industry demand we should look carefully at what may, in the future, be almost un-insurable risks and find ways to price-in specifics, to insure those risks our clients want to cover.
In contextualising the moment, Regulatory and Compliance firm Kroll emphasises geopolitical risk as a constant, but, during a pandemic, a war in Europe and a climate transition that is not nearly as advanced as it needs to be, the nexus, they argue, between geopolitics, economics and business has tightened.
Caught short by riots around the globe
Riots are happening across the world. Political riots are often triggered by stressed economic conditions; the impact and consequences of which should sit firmly with politicians and the state – not Insurance.
When the (SASRIA) riots happened in South Africa last July, were they only politically motivated, or were they stirred up by economic conditions. Today this is the case for riots across the world. As a result, riots are now a regular happening and will keep on happening, globally, as economic conditions worsen.
The rising cost of living mobilised hundreds of thousands of people in France last October. Demonstrations erupted following weeks of strikes and walkouts at oil refineries, fighting for wage increases which brought production to a halt, causing a shortage of fuel and massive, consequential losses, increased energy costs and the inevitable supply chain disruption on an international scale.
Consideration should be given also to the impact of increased cultural diversity in host and transit countries, brought about by massive migration and immigration trends. Are these aggravating factors in the socio-economic unrest phenomenon we see everywhere?
There is clearly a need for insurance to follow industry in terms of politics and political agendas.
What do you think?
Are these unforeseen political happenings and social uprising issues risks the insurance industry may qualify as political events and therefore the responsibility of the state and the governments?
Political figures must know that, if their political regime is such that it fosters inequality, it is the state structures that should pay the price in restitution and repair for the adverse outcomes of their political actions.
Similarly, what about losses stemming from fraudulent and corrupt practices across the public and private sectors plus the knock-on calamities arising? As an example, losses from state capture, organised crime, and corruption? Is this a function of insurance?
Caught short by COVID-19
COVID did not just arrive, nor has it left. The surge of new cases in China gives testimony to this.
The world cannot afford to continue working from a reactive platform and least of all our industry. Much has been said and continues to be said about COVID and its dire knock-on impacts as it continues to show its opportunistic callous ability to prevail, permute and spread. Can the world afford another lockdown and the impact on the economy?
Health crises are becoming global in their nature, and therefore, global in impact. Over the last decade, the spread of decease has intensified, and viruses have become increasingly resistant to treatment.
The lessons learned are invaluable for the insurance industry across the world and in the transformation, the frame of reference from the COVID-19 experience gained is a costly but valuable textbook for reform and the actualisation of risk and cover conditions.
What do you think?
Are we quick enough to see the trains coming?
Is the fundamental principle of insurance – the pooling of funds to cover the person who has the ill fortune – up for renewal?
Oh but wait, …there is more!
More wars, food insecurity, climate change-related catastrophes, water scarcity, soaring energy costs, more pandemics, more COVID-related variants, disrupted and insufficient energy supply,
What do you think?
As a global industry, are we, in insurance, behaving ‘head in the sand?
Does the insurance industry have the basis to act in good time in the interests of providing our clients with the cover they need at a cost that they can afford?
Looking at it from a global perspective, the reality is that three major catastrophic events have in my view caught the insurance industry short. This is the time to redefine, to map our way forward in this second decade of the 21st Century in the best interests of clients, shareholders, and reinsurers.
What do you think? Are we picking up the signs early enough to steer the ship in the storm or are we letting the storm take the helm?
Infiniti Insurance Limited is an A-(ZA)-rated non-life insurer that writes all classes of business including Aviation, Marine, Watercraft, Engineering, Heavy Commercial Vehicles, Liability and Guarantees. The Infiniti advantage lies in the quality of our service and our commitment to excellence.