The industry has gone through a lot of pain – plus plenty of prosperity, and a whole lot of change – in the 35 years that have elapsed since Reactions began writing about reinsurance in 1981.
The sector’s core function remains the same, but in many ways it is unrecognisable. Reactions veteran Garry Booth tells what it was like to journalise the industry back then, a typewriter, ashtray and telephone on the desk being
Not so for many in the sector, however, as Asbestos and environmental claims were becoming an unending nightmare, for the Lloyd’s market in particular, as the decade wore on.
In those days risk models were unheard of by underwriters operating on instinct, catastrophe bonds had not yet been invented, and while affectionate jokes about long lunches and how to photocopy an iPad screen still abound today, the sector has been transformed for the better since that era.
Quite a bit has changed even since I joined Reactions as its Dep Ed back in 2010, switching over to writing on re/insurance from covering the risks of a banking sector in turmoil. That was the year of Deepwater Horizon and the Chilean Earthquake, which soon gave way to a year of much bigger catastrophe losses in 2011, with the Christchurch Earthquake in New Zealand, the Tohoku tsunami and quake in Japan, and then the Thai floods, all happening in quick succession.
That was before the two major re/insurance trends at present – the unrelenting flow of alternative capital into the sector and the deluge of mergers and acquisitions among traditional players – had begun in earnest. Both are still in flux, so the industry itself is still very much subject to change.
In the decades since Reactions’ birth so much has changed already in the industry landscape and among the risks it exists to serve. Relative youth can produce a bias that needs guarding against: towards paying greater heed to events witnessed recently; rather than those experienced by previous generations (and, for me, a historian’s training seems the best primer for journalism).
Historical lessons of the industry’s past 35 years still resonate today. Environmental risks, for example, are very much alive and kicking, and a source of trepidation for “new risks”, for example, such as fracking in the energy business.
On a much bigger scale, climate change casts a huge shadow over the industry’s future, as it attempts to fulfil its social role by transferring and mitigating society’s risks for the 21st century in the decades to come.
The figures involved in losses and exposures today have multiplied exponentially from those 35 years ago, as the economy has grown and globalised, presenting greater scale of risk, vast new emerging market opportunities, and new (or seemingly new) risks to underwrite. Many of those risks of tomorrow cannot be countered just by looking back at the past.
Climate risk, terrorism, cyber, drones, increasing automation and the internet of things all represent risks and opportunities for the re/insurance sector.
One of the major challenges faced by the industry is in recruiting the technologists and leaders to take the helm in the decades to come. So the industry needs to make sure it gets the right people, systems and processes in place, to make sure it continues to navigate such perils and opportunities in the years to come.
This magazine issue takes a timely look at the biggest 35 events to have struck or affected the industry in the 35 years since Reactions’ birth. It also scrutinises some 35 major risks for industry professionals to consider for 2016 and the years ahead.
In this, Reactions will continue to record and reflect the latest thinking and discourse that the international insurance, reinsurance and risk transfer industry needs to help keep its leaders and decision makers ready and well informed to face the risks and opportunities of tomorrow’s world.
By David Benyon