2020 風險變化本質分析報告 - GUY（英文版）.pdf

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1、The Changing Nature of Risk August 2019 The Changing Nature of RiskGUY CARPENTER3 Contents Executive Summary 5 (Re)insurance Resolve 8 Changing Views of Risk 12 A Glimpse Into the Future 22 Conclusion 27 August 2019 The Changing Nature of RiskGUY CARPENTER5 Executive Summary The global risk landscap

2、e is changing rapidly. Cursory glances at studies conducted over the last decade on the risks that have commandeered businesses and (re)insurers agendas show that economic concerns dominated 10 years ago (at the height of the financial crisis) while technology, extreme weather and climate change pre

3、vail today. The last two factors in particular should come as no surprise given the number of catastrophes that devastated communities worldwide in 2017 and 2018. The accumulation of losses from a range of diverse perils during this time has brought an end to years of soft (re)insurance market condi

4、tions. The series of hurricane and typhoon strikes in the United States (2017/2018) and Japan (2018) cost the sector tens of billions of dollars. Although the loss potential associated with such “peak” peril events is monitored closely by risk carriers, the emergence of complex loss components for m

5、ost of these storms has surprised the market as losses continue to develop adversely. Costs for “non-peak” perils have also made a significant contribution to industry losses, with unprecedented wildfire costs in California being the most arresting. Ominously, the specter of climate change points to

6、 a future that will see only more frequent and severe weather events. Risk models will need to be recalibrated to accommodate this. If the last two years provide any sort of template for what can be expected in years to come, loss development for major events will be uncertain and the scale and seve

7、rity of “attritional” perils will accentuate protection gaps. This raises important questions about insurability and relevance in the long term. Technology is another factor that looks set to reshape the risk landscape over the next decade. The magnitude of change associated specifically with digita

8、lization is huge: The way people live, relate and work is being revolutionized, and virtually every industry is being impacted. Equally important, increased loss frequency and severity in a number of long-tail business lines are starting to squeeze carriers margins as social inflation appears to be

9、driving loss cost trends higher. This is significant because the casualty market has been the main catalyst of nearly all past market turns and it comes at a time of diminishing reserve redundancies. Given this challenging backdrop, it quickly becomes apparent why the sector is now undergoing a peri

10、od of transition. Fortunately, the reinsurance market is strongly positioned to support insurers through this period of change. Capitalization is key to this position of strength. Although capital inflows into the reinsurance sector have slowed this year as loss experiences have deteriorated, reinsu

11、rers desire and ability to underwrite risks remain healthy overall. Crucially, the sector has more than sufficient levels of capital relative to risk: Capacity was still adequate during this years mid-year renewal season, even as underwriting assumptions were adjusted to reflect the changing nature

12、of risk. Based on recent market behaviors, a more sophisticated and tailored approach to renewals is likely to prevail over the volatile and often indiscriminate reinsurance rate movements of the past, as reinsurers scrutinize cedents performance and loss experiences and allocate capacity accordingl

13、y. By working closely with their reinsurance and intermediary partners, insurers can minimize earnings volatility, reduce capital requirements, improve solvency and, ultimately, innovate and grow crucial attributes when looking to manage and prosper in an increasingly complex risk environment. The i

14、mpending degree of change that is to come over the next decade looks set to transform the risk landscape like never before. Guy Carpenter is uniquely positioned to support clients through this process. By applying best-in-class analytical tools and creating innovative and bespoke solutions, we are c

15、ommitted to obtaining the best cover and structures available in the marketplace. Ominously, the specter of climate change points to a future that will see only more frequent and severe weather events. Risk models will need to be recalibrated to accommodate this. August 2019 The Changing Nature of R

16、iskGUY CARPENTER6 Key Takeaways from Our Research 1. The accumulation of losses from a range of diverse natural catastrophe perils in 2017 and 2018 has brought an end to years of soft (re)insurance market conditions. This is not down only to the quantum of the losses, as demonstrated by the initial

17、muted pricing response in 2017 and 2018. The magnitude of loss creep for virtually every major peak peril loss sustained in the last two years has surprised the market, and losses continue to develop adversely. As a result, carriers have reassessed their views of risk over the last year or so. 2. Co

18、sts for non-peak perils have also made a significant contribution to industry losses, with unprecedented wildfire costs in California being the most arresting. Insured losses from wildfire activity in California in both 2017 and 2018 surpassed the combined costs of any previous decade: A striking st

19、atistic. Such outsized losses are not commensurate with a view of risk that has traditionally considered wildfire to be an attritional or secondarily peril. 3. The specter of climate change points to a future that will only see more frequent and severe weather events. Excessive rainfall and rising s

20、ea levels clearly bring an enhanced threat globally for more frequent and severe freshwater and coastal flood events. And sustained trends around increased wildfire activity and stalling hurricanes are thought to potentially have some link to the changing climate. 4. Risk models, already under scrut

21、iny due to loss creep and spiraling costs from attritional events, will need to be recalibrated to better understand the risk potential associated with these exposures. If the last two years provide any sort of template for what can be expected in years to come, loss development for major events wil

22、l be uncertain and the scale and severity of attritional perils will accentuate protection gaps. 5. It is not just about natural catastrophes. Digital technology is another factor that looks set to reshape the risk landscape over the next decade. A world driven by software is going to change everyth

23、ing. The bad news is that a number of innovations rely on legacy software that may be outdated or “rushed to market” for which cyber security is often a distant afterthought. 6. Equally important, increased loss frequency and severity in a number of long-tail business lines are starting to squeeze c

24、arriers margins as social inflation appears to be driving loss cost trends higher. This is significant because the casualty market has been the main catalyst of nearly all past market turns and it comes at a time of diminishing reserve redundancies. 7. How the risk landscape evolves from here will b

25、e pivotal in shaping the future of (re)insurance. Insurability is likely to become a key challenge for the sector as there is a dearth of data and modeling solutions for many new exposures. There are even questions around the insurability of some established risks such as extreme weather events, giv

26、en that the long-term trends associated with climate change remain difficult to measure, predict and, ultimately, model. 8. Whatever the future holds, reinsurance will be an important part of the solution. Reinsurance exists to protect against the unexpected. The expertise, support and partnership o

27、n offer empower insurers to innovate and grow. By working closely with their reinsurance and intermediary partners, insurers can minimize earnings volatility, reduce capital requirements, improve solvency and, ultimately, innovate and grow crucial attributes when looking to manage and prosper in an

28、increasingly complex risk environment. Divider Heading if required 28/28 August 2019 The Changing Nature of RiskGUY CARPENTER8 (Re)insurance Resolve Todays complex risk landscape poses both opportunities and challenges to the (re)insurance sector. At several forums this year, senior Marsh see Exhibi

29、t 18). 4. Other healthy/vibrant vegetation at the end of the wet winter season now has ample time to dry and become fuel sources later in the year, due to the earlier onset and delayed end to the dry season, particularly in central and southern California. 2019 Top 5 risks in terms of: 0 5 10 15 20

30、25 30 20192018201720162015 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 Hurricane Direct Loss Ratio Trended CAT Loss ($M) Direct Loss Ratio 0 20 40 60 80 100 120 2005200620072008200920102011201220132014201520162017 Severe convective storm activity Wildfi reWinter storm/Bl

31、izzard activity Booked Ultimate Loss Coumou et. al, 2018). 5. A warmer Artic is also associated with weaker jet streams and steering flows, which, in turn, has the potential to slow hurricane forward speeds. The prospect of more flood-related losses in the United States raises an important point abo

32、ut relevance. At present, flood is not covered by standard residential policies and commercial policies usually contain sublimits. For the relatively small number of U.S. homeowners and small businesses that do purchase flood protection, the federally backed National Flood Insurance Program is the g

33、o-to carrier. The financial cost of recovery for flood events therefore currently falls in large part to U.S. taxpayers, rather than to the well-capitalized (re)insurance sector. Strikingly, less than a quarter of Harveys total economic loss was insured by private carriers. There is clearly scope fo

34、r the private market to take on a greater proportion of flood risk than it does presently. This task is not without its challenges: Increasing correlations between climate change and flood risk, raising public awareness about standard exclusions and private cover availability, underinvestment in res

35、iliency efforts and developing new models, to name a few. But by doing so, the sector will make an important step in mitigating a key protection gap, create a potentially significant business opportunity and, in turn, help secure its long-term relevance. 9. Observed impacts of anthropogenic climate

36、change on wildfire in California, Earths Future. A recent study carried out by researchers at the Earth Institute at Columbia University linked climate change to the increased size and frequency of wildfires in California. In the past decade alone, the state has seen five of its 10 largest wildfires

37、 on record and seven of its 10 most destructive blazes. August 2019 The Changing Nature of RiskGUY CARPENTER26 Digital Technology Technology is another factor that looks set to transform the nature of risk over the next decade or two. Digitalization brings great promise and opportunity, but also new

38、 risks. The magnitude of change associated with digital technologies is huge: The way people live, relate and work is being revolutionized and virtually every industry is being (or will be) impacted. The future, if the past two hundred years are any indication, will be fantastic, unclear, chaotic, m

39、essy and litigious. Although attempts have been made to prophesize what this tech-dominated future will look like, the simple truth is it is still too early to know fully what the consequences of digitalization will be. But underwriters still need to prepare for what is likely to come, and the past

40、could hold important lessons for the future of underwriting. Access to professional, sophisticated and up-to-date technical expertise is the key to remaining competitive, enhancing operations and delivering successful 21st century underwriting. Lessons From the Past There have been at least six boom

41、 and bust cycles since the late 1700s, including the latest digital technological revolution. (Re)insurers have learned the hard way during this time that surprises are inevitable, rules often change and solvency depends on being conservative, careful and smart. Risk carriers know that damage, injur

42、y and litigation follow in the wake of every agricultural, industrial and technological boom cycle. They also know that new “public risks”10 are created during periods of transformational change. The asbestos crisis of the 1980s, which took seven or so decades and a revolution in injury law to manif

43、est, has meaningful lessons for managing the risks associated with todays digital technological revolution. It taught (re)insurers, for example, that they have a hard currency stake in the future and the past, especially those that write occurrence and accidents policies. These policies will respond

44、 to bodily injury, property damage and personal injury claims that occurred during the policy period but are reported decades later. One of the most challenging aspects of designing coverage grants for casualty catastrophe reinsurance products is anticipating and appreciating the forces and processe

45、s that make the transition from public risks to a potential insured loss. This journey often begins by eliminating or reducing the provisions of contract law that insulate manufacturers or service providers from the liabilities that may result from their products or services (which takes time) or im

46、posing strict liability on such manufacturers or service providers. Public risks during the 20th century were a product of significant investments in infrastructure, global manufacturing plants, transportations systems and various types of labor. The average person could not manufacture most items a

47、t scale in a home workshop. And these manufacturing facilities were fairly easily monitored, taxed and regulated. After all, it is easier to ascertain who is responsible for a specific, or class of, injury or damage when there is a discoverable manufacturing and distribution chain. A world driven by

48、 software will be much different. Software has been the common denominator of all the latest technology so far this century. Increasingly sophisticated coding, as well as increases in computing power, cloud storage and high-speed connectivity, have made advances possible in telecommunications, data

49、science, genetics, nanotechnology, robotics, autonomous vehicles, sensors, image recognition, virtual reality, additive manufacturing, the Internet of Things and AI. In addition, the internet is becoming increasingly powerful, and people and things all over the world are becoming more connected. These technologies and advancements may still be in their infancy, but they are going to change everything. Bad Code The bad news is that many of these innovations rely on legacy software that may be outdated or rushed to market, for which cyber security is often a distant aftertho