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The Geneva Association is due to report on its project to identify uninsurable risks and help create a marketplace that will provide coverage options for those risks. Patrick Liedtke, secretary general and managing director of the association, talked about the project's progress so far and what the group hopes to accomplish.
Q. The association has said a preliminary report on the project will be issued this year. When is it expected to be released?
A. I expect it will be ready by early summer. We will discuss it at an event that we are organizing with chief strategists and economists with the largest insurance companies to get their input. We want to gather as much intelligence from the industry as we can on this. We have already talked to the clients and brokers.
Q. What has the project revealed so far?
A. One of the things that everybody seems to grapple with is how to deal with new risks. This is one of the biggest problems. How can you quickly bring new risks to the market, in the sense of finding coverage? The availability of scientific information that is reliable is also important.
The other point is that we need to be flexible when it comes to regulation. In some areas, the regulatory environment is determining whether a risk is insurable.
Q. So what do you foresee as a result of the uninsured risk project?
A. It is an aim to prioritize this issue, and determine how to improve and enlarge markets for risk transfer. Commercial buyers are not different from other people; they make decisions about which risks to insure and which not to insure. To create a marketplace where there are more instruments that really meet their needs could be one of the positive outcomes of this project.
Ultimately, this initiative is about creating a marketplace full of different options. We want to say we helped create an environment where you have many good risk management options to cover your risks.
Q. Does the project address risks that may no longer be insurable?
A. That's a little bit less of a focus of this project. Obviously, we have come across a couple of those, but this is not a major focus. If you look at the Terrorism Risk Insurance Act in the U.S., obviously it enters into the debate.
Q. What other issues have come to light as the project has progressed?
A. Risk identification in some areas is failing. It is especially failing in individual risk management; people fail to identify which risks they should cover.
Q. What do you mean by individual risk management?
A. Personal risk management is perhaps a better word. You're thinking about your life and what particular risks you are facing. People may like to insure their bicycles, for example, but fail to buy adequate health insurance. An objective risk analysis would not lead you to buy bicycle insurance.