Lloyd’s CEO Richard Ward, in a speech given to a meeting in Tokyo of the Geneva Association, the organization for the study of insurance economics today, called for insurance to play a bigger role in providing vital financial assistance to catastrophe-hit areas and in helping some of the world’s poorest regions to prosper.
He added, however, that the industry cannot be seen as a panacea for the new risks being created by the white-hot pace of technological development.
Ward stressed that insurers play a vital role – oiling the wheels of the economy, allowing entrepreneurs a safety net to take risks that will ultimately push the economy forward – that benefit society as a whole. There also may be a great opportunity for the industry to increase its footprint in the longer term, he added, but he also warned that there are limits to what is insurable,.
Ward discussed the new technologies, such as nanotechnology to treat illness and disease, genetic modification of crops to counter famine and carbon sequestration to respond to climate change. He indicated that they “push the boundaries of insurability,” as the nature and scope of the risks involved is still largely unknown.
In such cases insurers cannot assume such exposures alone.Ward indicated that “governments should provide the backstop as they do for terrorism and other similar, risks.”
He added: “Our industry does not want to be seen as Luddites; but we have to firmly require the condition of insurability before we risk our shareholders’ capital.”
He also touched on the perils posed by climate change and such innovations as microinsurance and models like the Caribbean Catastrophe Risk Insurance Facility (CCRIF – www.ccrif.org), which combines funding from governments and the World Bank with capital from insurers, reinsurers and the financial markets to pay out in the wake of a hurricane or earthquake.
For the full text of the press bulletin with further details go to the Lloyd’s web site at www.lloyds.com.
Source: Lloyd’s of London
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