The Business Year Special Report
The Elephant in the Room
In the uncertain future that lies ahead, one certainty is increased exposure to natural disasters. And with that in mind, the mantra among reinsurers is adapting to society’s changing risks. 2021 provided a glimpse into what a future of increased claims and losses will look like. The total expected losses related to the COVID-19 pandemic exceed those of hurricane Katrina and the California fires combined.
To front this shifted reality, reinsurers are leaning heavily on tech for matters of risk insight and innovation. Insuretechs, technology start-ups focused on squeezing savings and efficiency within the insurance industry model, are being snatched up by the dozen. They are a disruptive force within the ecosystem and a pillar of its modernization. The goal is to produce increasingly accurate risk assessments by leaning on big data—a next generation crystal ball, if you will. The potential of more sophisticated modelling is higher profitability and, ultimately, the expansion of coverage. The world of tomorrow cannot do without the financial resilience of a sturdy reinsurance sector.
Colombia seems to be taking steps in the right direction. The country’s recent acceptance into the Organization for Economic Co-operation and Development (OECD) means businesses in the country now have to comply with stricter capital requirements and solvency minimums. These advances in corporate governance contribute to stronger financial resilience and encourage the development of the reinsurance and insurance sectors. For a country that is particularly exposed to the impacts of climate change, this is good news.