CCR Re deputy chief executive wants industry players to reflect the effects of climate change in their pricing
Pricing in reinsurance must adequately reflect the realities of climate change.
This is according to CCR Re deputy chief executive Laurent Montador, who says inadequate pricing is the greatest challenge currently facing the market.
CCR Re has employed its own division of scientists to study natural disasters and has partnered with various other groups to better understand the potential effects climate change will have in the coming years.
“We can see now that climate change is a reality, and so we have a duty not only for the general population, but for the market players as well,” he said.
“It’s important for the market dynamic that people that are business driven recognise this.”
Montador said that CCR Re has been adapting itself to cope with what could be more extreme and volatile environmental conditions, and said it was important that other industry players follow suit.
And this need to “transform” was exacerbated by the hurricanes last year.
He added: “It’s a very difficult environment that we face overall in the marketplace at the moment, both for traditional and non-traditional players.
“After 2017 we were expecting increases in rates, particularly in cat, but this has not happened to the extent we would have liked.
“Market dynamics gave rise to the situation, and now we have to organise ourselves around how best to cope with that.”
CCR’s coping strategy has seen it follow the industry trend of cutting costs and becoming more efficient.
But Montador says to ensure a quality customer service is maintained, it is vital that pricing is adequate.
He added: “Our first duty is to serve the customer, but as we have a long-term view with our partners we also need profitability, and when you see pricing below what is expected to be sufficient we have to raise questions.
“We need to be profitable in the long run and that works to help us better service our clients.”
He said a robust system for operating in the nat cat market moving forward would be allowing the majority of people in areas more likely to suffer a catastrophe to have insurance, and put a greater focus on prevention and crisis management.
He added: “Prevention will help cope with this expected threshold increase in nat cat. It probably won’t be enough, but there will be some effect.”