For those willing to adapt, the polycrisis presents opportunities, panelists said. (Credit: Good Studio/Adobe Stock)
Insurers need to adapt and evolve to survive the ‘polycrisis,’ according to a panel of experts at Send’s recent INFUSE webinar.
A polycrisis is the simultaneous occurrence of multiple, interconnected crises, from climate change and geopolitical volatility to supply chain shocks and economic disruption. In a polycrisis, the overall impact becomes greater than the sum of the individual crises’ effects, because the crises are interacting and amplifying each other.
In a polycrisis environment, risk is more complex, making it increasingly challenging for insurers to perform adequate assessments and set rates. Risks are no longer isolated; instead, they all relate to one another.
There are second and third order effects, unintended as well as intended consequences,” said panelist Neal Croft, a global client relationship and strategy lead. “You have to look across the system and not just at things in isolation.”
Panelists said today’s communication speeds and the immense volume of news and data also complicate the situation, making it difficult to separate meaningful information from the rest.
“Weeding out noise is the key,” said Dean LaPierre, chief underwriting officer at Cross Cover Insurance. “Focusing in on the noise to signal ratio, what is the data we can actually use to make good decisions?”
Panelists agreed that innovation is the solution to navigating these new complexities. Ina Bajrami, financial risk manager at Apollo, pointed to parametric insurance and real-time tracking of assets as good examples of industry evolution.
“Innovation needs to become part of underwriting culture,” she said. “That means identifying blind spots, encouraging new ideas and evolving how we look at risk.”
LaPierre said elevated risks are nothing to fear: they create need, need creates innovation and innovation creates business. For those who are willing to adapt, the era of polycrisis holds a lot of opportunity.
“The road has always been bumpy,” he said. “But your job as a risk manager or an underwriter is to minimize the noise and let the market do what it does best, which is transfer risk.”
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