Atlas Magazine February 2023

Insurance of systemic risks

In January 2023, three reports designed for prospective risk mapping were published simultaneously. Allianz's annual risk survey and the World Economic Forum's Global Risks Report are assessing threats on a global scale, while at a more local level France Assureurs report is mapping risks for 2023
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Even if the order of priorities and perspectives look different, the three studies have more or less come to the same conclusions.

For the majority of players, therefore, cyber risks stand as the highest threat in the near and distant future, a fear that was exacerbated by the Covid-19 pandemic, telecommuting and the all-digital policy.

Macro-economic disruptions are the second highest threat reported in 2023. Geopolitical conflicts and in particular the Russia-Ukraine war have brought out major threats deeply intertwined with each other such as supply chain disruptions, energy crisis, inflation, recession, …

In 2023, natural catastrophes, a risk of overwhelming scale through 2000 to 2022 years, and climate change, a highly devastating risk in the future, have come only in 6th and 7th position.

Faced with the emergence of so many systemic risks, the traditional insurance model has shown its limits. Increasing premiums, extending the list of exclusions, and reducing capacities is no longer enough.

A three-way partnership is needed to address systemic risks:

  • Policyholders willing to retain more risks and pay more premiums,
  • The insurers who will to a reasonable extent bear higher intensity and frequency claims,
  • The State, guarantor of the viability of the system, which will reimburse the insurers for the excess of loss that exceed a certain level.

Atlas Magazine N°198 February 2023

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