In the latest iteration of ‘Reinsurance Banana Skins’, biennial research carried out by PwC and CSFI reveals reinsurers’ views on the urgent risks they face.
Launched this morning at an event hosted by PwC and Swiss Re Reinsurance Solutions at the Rendez-Vous de Septembre in Monte Carlo, the survey results show respondents from the reinsurance sector identified climate change as the most significant risk they face.
Survey respondents were asked how well prepared they thought the industry was to handle the risks they identified. On a scale of 1 (poorly) to 5 (well) reinsurers gave an average response of 3.41, above the average of 3.20 and the highest of all sub-sectors (composite 3.38, life 3.14, P&C/ non-life 3.13).
Reinsurers have long been at the forefront of developments in data and analytics and this optimism could reflect their confidence around their ability to harness the power of new technology.
PwC sees wide-ranging impacts for reinsurers resulting from the risk of climate change – pricing, legal liabilities, changing consumer behaviour alongside the challenge that the transition to net zero poses to reinsurers’ own operations.
Commenting on these results, PwC UK partner and London market leader, Andy Moore, said: “Reinsurers are acknowledging that the effects of climate change are already being felt.
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By GlobalData“Combined with the fact that reinsurance is the most optimistic of all the insurance sub-sectors when assessing its preparedness to handle risks, these results make the case that now is the time to think differently and find solutions.
“It’s impossible to fully prepare for such a fast-changing and unpredictable risk, but the sheer scale of the impact on almost all areas of the market means doing nothing is not an option. Well-run companies are already taking action to enhance risk modelling, re-assess the resilience of their portfolios and implement strategic risk management reviews.
“Due to the ever-changing nature of this risk, companies need to put controls in place to ensure they have confidence in the data, infrastructure and policies they will rely on to remain agile in the face of the climate emergency and its repercussions. Doing this will put reinsurers in the strong position they need as they play a key role in managing the wider global transition to net zero”