Collaboration needed to tackle rising nat cat losses: Vickers, Gallagher Re

As reinsurers navigate the complexities of rising natural catastrophe losses, James Vickers, Chairman of Gallagher Re International, discusses their efforts to support primary insurers while emphasising the need for broader collaboration to ensure risks are managed and priced effectively.

In a recent video interview with Reinsurance News, Vickers highlighted that “reinsurers are joining the primary companies in articulating some of the challenges and issues out there.” This includes actively engaging in discussions on topics such as price, coverage, and deductibles, which are a primary underwriting issue.

Vickers noted, “Reinsurers have been very active in that space, in terms of talking and supporting and providing some academic and technical research.”

However, he acknowledged that reinsurers’ ability to provide risk transfer is limited.

“At the end of the day, there’s only so much reinsurers can do, because at the heart of it is the connection between the original insurance company and the original policy holder and trying to persuade them to do the right thing and/or to find a way to accept the terms and conditions and the premium pricing that’s been put out for the risk,” Vickers explained.

He also cautioned against over-relying on government-backed solutions during extreme catastrophe events, as this could undermine the private insurance market.

“With the right actions, these risks are insurable at a reasonable price,” Vickers said. “But it does take everybody to get involved in trying to solve the problem and not just try to dump it on one particular sector.”

Gallagher Re’s recent Natural Catastrophe and Climate Report suggests that the ‘new normal’ for annual insured losses is approaching $150 billion.

This is particularly relevant in light of the recent devastating California wildfires, with Vickers questioning how affected individuals will rebuild their properties and how the industry can assist.

“The question is, what can the insurance industry do to persuade original policyholders to build back better. And how can we help those who, sadly, haven’t got the resources?” Vickers asked.

The full video interview is embedded below.

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