The opportunities that lie ahead for the insurance sector are vast and complex and will require thinking about risks in terms beyond what is currently known and measurable. Intangible risk exposure is different: it is not geographically contained like a natural catastrophe and is not as explicitly calculable as a burning building. Once-in-a-lifetime innovation like this comes from a diversity of ideas, and insurers have the opportunity to be a leading beacon in the unrest sweeping our country. Having a workforce that reflects the world we live in is good not only for society but also for business, according to John Trace, CEO, North America, Guy Carpenter, and Jay Dhru, Global Head of Business Intelligence, Guy Carpenter.
Insurers will also need a significant amount of capital to support these growth opportunities and rating agency requirements. Companies will have to decide how much capital they want tied up to service the tail versus how much to deploy to capitalize more lucrative opportunities.
Solutions around customized, structured reinsurance products enable carriers to redeploy capital supporting prior years’ underwriting and provide protection. By leveraging their existing balance sheets, carriers can essentially access capital in a relatively cost-effective way. These solutions include adverse development covers, which are essentially excess of loss covers attaching at or above carried reserve levels and loss portfolio transfers, which generally attach at first dollar of carried reserves.
Guy Carpenter has extensive experience helping companies understand and manage the complexities of reserve risk from both a balance sheet and capital perspective. We work with clients to create tailored solutions that match insurers’ capital and risk levels for maximum efficiency. These solutions offer greater certainty in financial results, capital efficiency, and therefore greater opportunities for profitable growth. Our experienced team has collectively executed on transactions covering in excess of USD 25 billion of reserves over the years in every major jurisdiction. With vast actuarial, accounting, financial, underwriting and market experience, the team delivers results to insurers large and small around the world.