Howden Re calls for industry innovation amid rising risks

Howden Re calls for industry innovation amid rising risks | Insurance Business Australia

Reinsurance

Howden Re calls for industry innovation amid rising risks

Report urges industry to address natural disasters, political violence, and casualty threats

Reinsurance

By
Kenneth Araullo

Howden Re, the reinsurance and risk advisory division of global insurance intermediary Howden, has released a report that emphasizes the need for industry collaboration in developing innovative solutions as the global reinsurance sector faces increasingly complex challenges, including natural catastrophes, political violence, and emerging casualty risks.

Titled “Beyond the Horizon: Shaping the Future of Risk,” the report outlines strategic approaches that will be critical as the industry navigates its next phase. It points to the interconnected and severe nature of risks, driven by climate change, geopolitical tensions, and economic instability, which are testing traditional risk management models.

According to the report, the industry must adapt to these changing demands and challenges.

Massimo Reina, CEO of Howden Re International, noted that the pace at which the risk landscape is evolving requires the industry to innovate. He said collaboration between brokers, reinsurers, and capital providers will be essential in ensuring preparedness and delivering risk resilience in today’s market.

The report identifies three main areas reshaping the reinsurance sector. The first is rising natural catastrophe losses in Europe, highlighted by recent flood events and hailstorms, such as the 2024 floods in Bavaria and the 2023 hailstorms in Italy’s Po Valley.

These events underscore the need for the sector to develop tailored products that address both peak and non-peak perils, proposing strategies such as improved flood protection infrastructure and exposure management tools for hail damage.

The second area of concern is emerging geopolitical risks, such as the increasing frequency of strike, riot, and civil commotion (SRCC) events and political violence (PV). Although these risks are global, they are particularly acute in regions with political instability.

The report examines recent incidents in countries like South Africa and New Caledonia and suggests advanced modeling techniques and innovative risk transfer solutions to manage these complex exposures.

The report also addresses challenges in casualty lines, specifically in relation to growing liabilities associated with persistent pollutants like per- and polyfluoroalkyl substances (PFAS), as well as evolving risks in the motor market due to the rise of autonomous vehicles.

These emerging issues call for a reevaluation of traditional reserving strategies and a more granular approach to managing long-tail liabilities.

David Flandro (pictured above), head of industry analysis and strategic advisory at Howden Re, emphasized the severity and interconnectedness of today’s risks, calling for tailored solutions that address the specific challenges faced by different regions and lines of business.

Looking ahead, the report suggests that the reinsurance market’s future will focus on resilience, adaptability, and innovation. The ability to anticipate and respond to evolving threats will be key to maintaining market stability and growth.

It offers specific recommendations for new solutions, such as enhanced reinsurance structures for European flood and hail events, parametric products for SRCC and PV exposures, and advanced liability management strategies in the casualty sector.

Reina concluded that innovation and collaboration will be central to the future of risk management, with Howden Re committed to ensuring the reinsurance industry is positioned for success in this new era.

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