Uncharted waters: Tackling reinsurers’ riskiest exposures

There are no tried and tested strategies for dealing with the banana
skins that have shot to the top of reinsurers’ risk registers – cyber
risk, change management and political upheaval. How can you get
to grips with these highly unpredictable and disruptive exposures?

Insurance Banana Skins is a unique survey of the issues at the top of the industry’s risk register and how these perceptions change over time. The
biennial report is produced by the The Centre for the Study of Financial Innovation (CFSI) in association with PwC.

What’s most striking about the latest set of results is how far and how fast the risk landscape is shifting. Having for many years been dominated by the familiar headaches of solvency regulation and a challenging market environment, the risks that now cause the most sleepless nights are rooted in the shock and uncertainty of the new.

At number one is cyber risk, reflecting both the anxieties of underwriting a risk that’s constantly shifting and the rising threat to reinsurers themselves. Far from being just a technology risk, cyber is now a huge reputational and systemic concern. At number two is the industry’s ability to address a formidable agenda of new technology and shifting customer and conduct expectations, along with the associated pressure on service, performance and costs. Signs of the upheaval are all around us, from new forms of underwriting and risk transfer, to increased automation and inroads from InsurTech right along the value chain. And even more disruption is coming up on the horizon in areas ranging from artificial intelligence (AI) to driverless cars.

We also focus on what the Banana Skins survey describes as ‘political interference’ on account of its rapid rise up the risk rankings and particular relevance to prominent reinsurance centres, notably the UK and Bermuda. As a global industry, reinsurance faces considerable challenges from the political developments, changes in trading arrangements and the shift towards more nationalistic rather than global approaches. Our analysis of the implications looks in particular at the implications of Brexit and an uncertain US tax agenda.

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Published by

Patrick Maeder

Patrick Maeder

Patrick Mäder
Birchstrasse 160
Postfach, 8050 Zürich
+41 58 792 45 90

Patrick is PwC’s Swiss Financial Service Consulting leader and the EMEA Insurance Consulting leader. Patrick has over 25 years of experience in the international Financial Services and Consulting industry. Over the last 15 years he had leadership roles in Management Consulting and led various operating finance- and risk transformation projects with a focus on model design, target architecture and implementation projects at various Financial Services companies in Bermuda, the US, the UK and Europe.