Insurers and reinsurers have been told they need to ensure they play a fundamental role in the management of the mega trends which face society.
Speaking at the S&P European Insurance conference Aviva Group CEO Amanda Blanc said the first stage in the journey was to rebuild the industry’s battered reputation which had been further impacted but its performance during the COVID pandemic.
When asked about the risks the industry faced, she replied: “The biggest risk for insurers is their reputation. The past year makes me very sad when I look at how insurers have come out of the COVID crisis. The business interruption issues have only added to the problems with reputation the market had before the pandemic.”
Ms Blanc said insurance remained a grudge purchase and a product that none of the industry’s clients wanted to use.
However, the industry had to look to get the message across in terms of the role it played in society.
“We have a massive role to play in the management of the mega trends that affect society,” she added. “We play a fundamental role in society, and we need to emphasis that role and not shoot ourselves in the foot as we have in the past. We need to rebuild our reputation if we are to play the role of which we are capable.”
When asked what the mega trends were Ms Blanc said many of the trends were already evident prior to the pandemic but COVID has exacerbated their impact over the past 12 months.
“We face an aging global population and a rise in the demand for healthcare which is estimated to be worth £10 trillion by 2020,” she explained.
Momentum is gathering around sustainability and climate change and was viewed as the biggest risk to the planet and with it the market according to Ms Blanc, who added unless steps were taken insurance may well become redundant given the risks climate change will pose.
“We have to think very carefully how we support the efforts to tackle climate change both as underwriters and asset managers,” she explained. “If we do not adapt then we will become irrelevant.”
Ms Blanc said the period from 2010-19 was the costliest decade in history for insured natural catastrophes.
“We need to be serious about climate change,” she added. “It will be more difficult to offer cover if we do not take action.
“In a four-degree world, which is the current scenario, the insurance industry simply does not operate, so we need to do something.
“We need to consider where we invest our assets and offer our insurance.”
However, Ms Blanc said she did not agree with the moves by many insurers to walk away from carbon heavy industries such as coal, preferring to take a different approach.
“We need to look more at engagement rather than exclusion,” she explained. “We need to work with businesses and better engage so we can help in the management of transition. The problem with exclusion is you tend to drive people to other places, so in my view engagement is a more positive option.”