Aon plc (NYSE: AON), a leading global professional services firm providing a broad range of risk, retirement and health solutions, has interviewed the Chief Executive Officer of reinsurer Peak Re, Franz-Josef Hahn, as part of its Virtual Reinsurance Renewal Season fireside chats.
The goal of Aon’s fireside chats is to drive growth across the re/insurance industry in order to bring capital closer to clients’ needs and enable them to flourish in a stronger economy. The series will discuss the challenges and opportunities facing major re/insurers and insurance buyers, sharing both perspectives.
Hosted by Dominic Christian, Global Chairman of Aon’s Reinsurance Solutions, Mr. Hahn said that the wording in pandemic insurance contracts written in Asia Pacific were often tighter than in more developed markets due to the region’s additional experience with contagious diseases.
“Specifically, when you look at COVID-19, this part of the world is going through its fifth epidemic this century, and this century is only 20 years old. There are much less problems on the wordings side in respect of pandemics in Asia,” he said.
Looking ahead to January 1, 2021 renewals, Mr. Hahn highlighted that the period represents a chance for reinsurers to “correct pricing” – a move he believes necessary for the development of a “sustainable” marketplace.
“Otherwise, [the marketplace] is not going to go any further and no capacity will be provided any longer,” he said.
He added that Hong Kong-based global reinsurer Peak Re was committed to providing cover for cyber risk, but said the company took a “more cautious” approach to this line of business due to the inadequate resources that some firms had allocated to dealing with their cyber exposures. He therefore urged the industry to assist its clients in managing cyber risk: “This industry needs to develop affordable risk management as a service to the [small- to mid-sized enterprises] market to create a better basis for the insurability of cyber risk, at least to a certain extent.”
In looking at future risks, Mr. Hahn highlighted water shortages as being a key driver of global conflict in the future.
“Water reduction will be one of the biggest challenges to mankind in the future, and it is today already. We see across Asia that water is not necessarily readily available to all. So we will face migration because of this, we will face, possibly also – and this goes beyond insurance – conflicts about water more and more in the future; we see them now already, but this will develop.”
Mr. Hahn added that insurance had to be “an integrated part of working for the better for the future.”.
He highlighted the continued potential of the growing Asian insurance markets, acknowledging that strongly growing aggregates in markets such as China would require the capacity of a range of capital sources.
To watch the full interview and sign up for future fireside chats, please click here: https://aon.io/31YRfMP.