Global property insurers see ‘alarming’ losses as risk models lag, report says
LONDON (Reuters) – Global property and casualty insurers showed “alarming” underwriting losses in 2022 as natural catastrophes increased and risk models failed to keep up, a report from consultants Capgemini said on Wednesday.
Global insured losses from natural catastrophes have been surpassing $100 billion annually in recent years, driven higher by issues such as winter storms. Industry sources see climate change and increased building in exposed areas as contributing to the losses.
The insurers’ global combined ratio, a measure of claims and expenses against premium revenue, was 103% in 2022, Capgemini said. A level above 100 indicates an underwriting loss. Property insurers have suffered three years of underwriting losses in the past four years, the report said.
Only 27% of insurance executives surveyed believe their firms have advanced predictive modelling capabilities.
“Accurate risk prediction and pricing are becoming increasingly challenging and leading to insurability concerns,” Anirban Bose, Capgemini financial services strategic business unit CEO, said in the report.
The report gathered information from 18 insurance markets, including Britain, Hong Kong, India and the United States, through polling of insurance customers and interviews with insurance executives and underwriters.
