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Editorial: Opportunity in the wake of disaster


After several years of relatively low losses, insurers and reinsurers are seeing significant claims coming in as a result of the recent string of natural catastrophes, which provides the industry with an opportunity.

Not to capitalize on a surge in pricing, though that’s a possible outcome, but to improve its image in the eyes of its customers, both personal and commercial.

It’s a truism that the insurance industry has a poor reputation with the public, and it’s no surprise that’s the case. Premiums are paid and never seen again by many policyholders, so there appears to be little tangible benefit in buying coverage. When claims are made, deductibles and exclusions often limit claims payments, which causes more resentment, even though they may be clearly defined in the policy.

On top of that, of course, it’s not unheard of for insurers to be overzealous in seeking to deny coverage in the wake of disasters.

Given that background, it was refreshing to hear industry executives going out of their way to express their concern for the people affected by the recent hurricanes at last month’s reinsurance meeting in Monte Carlo, Monaco. Time and again, senior reinsurance executives spoke about the need to think about the human toll before the financial toll, and that the industry would fulfill its obligations. “It’s what we are all about — helping manage the impact of a major event,” said one leading executive. They were likely also calculating the possible financial upside of the storms if premiums rise as a result, but their compassion was no doubt genuine.

The disasters also come at a time when the insurance industry is looking to expand its reach. In particular, various multinational efforts to expand insurance in developing nations are picking up steam as the industry seeks to offer risk management solutions to parts of world that desperately need them. The industry would also benefit from securing a bigger market for its products, of course, but that’s a legitimate goal, too.

For such efforts to succeed, however, insurers and reinsurers need to work with governments of developing nations and overcome perceptions that they are trying to just boost their profits at the expense of nations that have few resources to spare.

That’s why it’s important for the industry that insurers respond with understanding to the human misery wreaked by hurricanes Harvey, Irma and Maria, as well as other disasters. Most people don’t expect insurers to pay for losses they don’t cover, but it’s within the gray areas where the industry’s reputation withers or prospers. Denying borderline claims for businesses and people in desperate situations would just fuel more resentment to a sector that, for the most part, doesn’t deserve it.

Many property insurers and reinsurers are in a good financial position at the moment, after years of relatively few claims. Now’s the time to shine.


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