Monte Carlo Tales

DOCOsoft’s roving reporter attended the 2019 Monte Carlo Rendezvous this year with the words of his South London GP ringing in his ears: “Remember, avoid the foie gras, no steak tartare, avoid desserts and strictly no wine, to get the old cholesterol down.”

So it was with a heavy heart that our correspondent kicked off his busy itinerary to learn that the Future at Lloyd’s report was going to receive plenty of attention at this year’s event. The report aims to “supercharge” innovation in response to customer needs. According to the Future at Lloyd’s prospectus, one 2017 annual risk survey shows that half of the top 10 risks identified by risk managers are uninsurable. In part, this is because insurers have not reacted quickly enough to the changing risk landscape.

Details of the execution plan for Lloyd’s strategic overhaul became clearer at the Rendezvous, on certain aspects of the vision, which either deliver immediate value to market incumbents or are “quick wins” for the Corporation.
The initial focus will be on claims processing, the Lloyd’s Risk Exchange and the complex risk platform, however work has also begun in earnest on the syndicate in a box (SIAB) framework.

Phase One
Lloyd’s is understood to be targeting a phased execution of the strategy. As such, the forthcoming blueprint is expected to outline a roadmap for “phase one”, or what can be delivered in the next 12 months, with the end goal in mind.
It was also reported that Lloyd’s believes introducing a one-year investment horizon will be a quick win to boost ILS participation but has backed away from the idea of launching a market tracker itself. Meanwhile, Lloyd’s CEO John Neal highlighted the idea of a syndicate in a box as an approach that could work well for ILS firms.

Lloyd’s currently has about 5 per cent of the £800bn commercial, corporate and specialty (re)insurance global market. The target is to double that, however, it appears that ILS capacity not be used via the tracker fund touted in the corporation’s first draft for its future vision released earlier this year.
Saturday night, Monte Carlo Roving reporter attends first dinner function – Menu includes TWO STARTERS! Pork rillettes, followed by foie gras (with obligatory sweet Sauterne wine), choice of steak tartare or deep fried duck, cheese selection and chocolate gateau. Chocolate truffles are then brought out just in case diners are still feeling a bit peckish. Our roving reporter manages to swerve the delicious Sauternes wine but is force-fed his food dishes – under protest – by an aggressive French waiter.  Calorie count: approx. 4,500.

Insurance Protection Gaps
In the wider companies market, it was reported that technological developments at Swiss Re could drive significant opportunity for the firm, as well as benefits for the rest of society by narrowing so-called protection gaps and expanding coverage.
The Insurer magazine on day three of the conference carried an analysis of the future of disruption. In order to meet the evolving challenges facing clients today, enhanced analytics will be deployable alongside robust financial data. This will enable better strategic decisions around growth, better analysis of claims trends, more economical placements and more effective and efficient reinsurance pricing and purchasing.

Sunday night, Monte Carlo
Still recovering from the previous day’s excess, our roving reporter vows to enjoy a calorie-lite evening in the delightful marina chosen by Sunday night’s aviation broker party host. Seafood platter seems like a light, sensible option, reasons our roving reporter. Subsequently, a large silver plate arrives, carried by two burly waiters, on which is perched a large lobster, an improbably sized giant crab, 15 king sized prawns, 10 langoustines, 8 oysters, two many mussels and clams to count, and a small bowl of winkles. Calorie count: approx. 5,000.

Reinsurance Market Outlook                                                                                                                  Reinsurance market conditions look set to be stable to steadily improving as we head toward 1 January, but will continue to lag the primary and retro markets. According to Insurance Insider, the lack of reinsurance capital depletion, along with rising capital as bond yields fall and the challenges of pushing price on diversifying risks, means that there are unlikely to be significant across-the-board rate rises.

However, the reinsurance sector differs substantially from the primary markets in the US and London, and from the global retro market. As Insider reports, both the primary markets and the retro market have seen significant capital withdrawal via either capital depletion or dramatic remediation work. Lloyd’s has seen dozens of exits from reduction in available capacity.

Dorian Claims News
A consensus was beginning to form over the (re)insurance industry’s exposure to losses arising from Hurricane Dorian, with $3bn to $5bn being the most widely accepted range. Some sources, however, suggested a range of $1.5bn to $5bn. That would match the lower end of the range that AIR Worldwide issued of $1.5bn to $3bn, though that forecast included only Caribbean claims.
Meanwhile, catastrophe modeller Karen Clark & Company issued a preliminary estimate of economic losses in the Bahamas from Dorian at $7bn. As one industry source explained, it is generally accepted that 40-70 per cent of that number could be taken as an insured loss. That would put insured losses at a range of $2.8bn to $4.9bn for the Bahamas.

Monday night, Monte Carlo
Having chosen the deep fried duck on Saturday night instead of steak tartare, the roving reporter decides to try the steak and believes he is being sophisticated by asking for it to be cooked medium rare. Two hours of unendurable “banter” ensue as the assembled dinner party guests unite in a frenzy of alcohol induced mockery. Multiple social media platforms are then employed to disseminate the news widely across the London insurance market Calorie count: low. Humiliation factor: 100 per cent.

Cyber Growth
The cyber market continues to show no signs of slowing down. Speaking during a press conference at the Monte Carlo Rendezvous, Torsten Jeworrek, chairman of Munich Re’s reinsurance committee, highlighted figures that show global cyber (re)insurance premium will amount to almost $7bn come the end of 2019. That figure is set to rise to almost $9bn in 2020. “[Our] growth expectation in the cyber insurance market is unchanged,” Jeworrek said. “We still expect this exponential growth of 25-30 per cent every year.” As Insurance Insider notes, there have been a series of headline-grabbing attacks on prominent companies recently, with British Airways, real estate insurer First American, Capital One and Marriott all falling victim to cyber criminals.

Tuesday night, Monte Carlo
Dinner concludes without mishap for our roving reporter (now apparently to be known henceforth by all delegates as Tartare), however, the last hurdle to overcome is the Sirius White Mountains cocktail party. Having managed to swerve all forms of alcohol for five days and almost four nights, our reporter strolls into the party and is caught in a pincer movement of 15 waiters bearing trays laden with expensive Champagne. Resistance appears useless until our man spots a solitary, sad looking glass of freshly squeezed orange juice, which he manages to secure despite all round general astonishment that such a feat has been achieved – the first time since 1986 according to one insurance industry veteran. Now 1am in the morning, it is serious party time for all the assembled Monte Carlo delegates at which point, our reporter makes his excuses and leaves!