What qualifies as insurance? Risk transfer and risk distribution are usually cited as key factors, but what if a policy passes this two-part test, before failing the ‘rule of indemnity’ test, asks Greg Lang of the Reinsurance and Insurance Network.
Identifying low probability, high severity risks can be a challenge, as evidenced by the large number of companies caught without coverage when the COVID-19 pandemic struck. The Delphi method is one way that companies can prepare for the unexpected, says Gordon Thompson of AmeRisk Consulting.
Risk managers entered 2020 with certain expectations about the challenges and opportunities the year would present. The onset of the COVID-19 pandemic has forced them to throw their plans out of the window, and rethink how to manage their exposures in a world that suddenly looks very different, says Milliman’s Mike Meehan.
The concept and understanding of captive insurance in Latin America and the Caribbean has been evolving over the past few years, and the adoption of captives among organisations in the region has progressed considerably, say Marsh’s Maria Escobar and Alejandro Santos.
The COVID-19 outbreak has been a social and economic disaster, and it is no surprise that authorities have been keen for re/insurers to help businesses pay the rapidly escalating bill resulting from the economic shutdown. But forcing institutions to pay out for risks that were never factored into their original premiums is not the way to go, says Michael Mead of M.R. Mead & Co.
The world is changing rapidly, and the insurance industry is reinventing itself to offer new solutions to emerging risks through both traditional products and alternative risk transfer solutions. To ensure it remains relevant in a future dominated by intangible assets and risks that are difficult to price, the insurance industry must revolutionise its use of data and seek collaboration with insurtech companies and customers alike, says Guglielmo Maggini of the Allianz Group.
The COVID-19 crisis has exposed how interdependent risk has become in the modern world, and the extent to which a single event can devastate whole economies, let alone individual businesses. The world must respond by becoming much more creative in its approach to risk management, and captives should be at the heart of those efforts, says Michael Zuckerman of Temple University’s Fox School of Business.
New and existing captives must provide adverse scenario modelling as part of their feasibility and application process, but most domiciles do not explicitly outline the specific adverse scenarios that should be included. Captives should engage their actuaries early and often, say Enoch Starnes and Michelle Bradley at Sigma.
Life science companies originally flocked to captive insurance due to a lack of meaningful product liability insurance capacity. As rates harden and terms and conditions tighten, captives can once again ride to the rescue, say Aon’s Anne Christine Fischer and Simon Huttley.
Captives can offer flexibility in managing the emerging risks faced by cannabis companies, offering insurance where the market is limited or has excluded certain coverages, says Alexandra Gedge of Marsh Captive Solutions.