While Covid-19 has inevitably taken centre stage this year, Julian Enoizi tells Luke Holloway why other systemic threats must not be forgotten
Risk does not rest. And although the majority of 2020 has been enveloped by Covid-19, it is vital the insurance profession does not lose sight of other systemic threats, says CEO of Pool Re, Julian Enoizi.
“If you were to pick up a year-old copy of The Journal, the chances are that on page one you would read about cyber threat,” says Mr Enoizi. “In the last 12 months, cyber and terrorism have disappeared from the insurance press and the public psyche because everyone has been so consumed by the risk of the day.
“To suggest that those two threats have gone away is extremely dangerous.”
In autumn, the UK terrorism threat level was raised and there have been widespread reports – including one published by Pool Re in November – that in 2021 there is likely to be an elevated terrorism threat in Britain, spilling over from events in Europe.
“You now have terrorists that are alive to the fact that a major biological agent could create this kind of global slowdown,” says Mr Enoizi.
“While we address pandemic risk, it would be a mistake to ignore other forms of systemic risk that could have happened instead of this – and cyber is the obvious one. It is something that the insurance profession and the government have to keep at the front of their minds.”
It has been a very busy year for Pool Re. After being officially classified as a government entity last March, it has since been subject to a review concluding in spring 2021, which will set the strategic direction for the insurer for the coming five years.
“It has been a remarkable and challenging year,” Mr Enoizi tells us. “Focusing on terrorism is what we do – that is our mandate and our remit. But we have done a good job of translating our expertise and experience back into the situation that is happening around the world. We are learning lessons from a systemic event unfolding in front of our eyes, the size of which none of us have ever seen in our lives before.”
So, could a model like Pool Re work for pandemic risk? Mr Enoizi says: “There is a clear distinction to be made between manmade and natural catastrophe. There is also a distinction between different forms of government and how they deal with catastrophic, existential and societal events. If insurers retreat from new forms of risk, or risk that is ‘too big’, there is a danger that by managing our own risk, we will effectively be making ourselves irrelevant to the very customers we are trying to protect.”
The question then becomes what form of involvement can the profession have? Pool Re provides a model for handling what was once thought to be a risk too difficult to insure.
“In terms of terrorism risk, 27 years ago the UK government was the insurer of first resort,” says Mr Enoizi. “Today, our knowledge and understanding of that risk have meant that the government is the last resort.
“We need to adopt that mindset as we approach building something to deal with these kinds of risks in the future. If we do not, we will deny society the use of what we are good at in terms of actuating, modelling, pricing and understanding risk and the economic impact it can have,” he says.
Public trust is something Mr Enoizi points to as being vital to the future of the profession and he says insurers must work hard to rebuild any reputational damage done during Covid-19.
“Trust is the currency on which we trade and if consumers are asked to buy a product that may not respond when they need it most, they will probably make a choice not to buy that product.
“The CII is about promoting professional standards and I question what kind of a professional image the insurance sector has now. Reputations take a very long time to build or rebuild and if we don’t do something to repair it – or rethink our business model so that we can participate in tomorrow’s form of risk – then somebody else who hasn’t even been born yet is going to figure out how to do it for us. And they will do it – there’s no two ways about it.”
Mr Enozi looks to the major trends certain to affect insurance and financial services in the coming years, highlighting the shift towards remote working and increasing diversity in the sector as ways to tackle them successfully.
If we don’t do something to repair trust – or rethink our business model so that we can participate in tomorrow’s form of risk – then somebody else who hasn’t even been born yet is going to figure out how to do it for us
“There are several large risks in front of us right now: pandemic; Brexit and our ability to trade frictionlessly; climate change; ageing population disparity and wealth; and how we as a profession deal with these risks,” he says.
“We must decide whether to remain in the working practices of the past or modernise the way we work. That massively entails diversity of thought, diversity of talent and the people we attract into insurance.
“We need people who have the ideas that will make us evolve and move forwards, people with backgrounds and experience that can help us deal with the systemic problems of the future.”
The start of the decade has produced incredible challenges that insurers are working to help society overcome – and the profession must not rest until they do.
Luke Holloway is editor of The Journal
Education- He is a graduate of the Universities of Birmingham and Limoges and is fluent in French and Italian.
Advisory- He sits on the advisory board of the OECD International Network on the Management of Catastrophes.
Trust- He has chaired the Prince’s Trust Insurance Leadership Group and was awarded Freedom of the City becoming a Liveryman of the Worshipful Company of Insurers.