Howden Re cites severe weather, SRCC as major reinsurance losses

Challenges in casualty lines include risks from autonomous vehicles.

Howden Re unveiled three key themes that will shape the future of the risk landscape in reinsurance, driven by climate change, geopolitical tensions, and economic volatility. 

The report, “Beyond the Horizon: Shaping the Future of Risk”, said that recent severe weather events, including the 2024 floods in Bavaria and 2023 hailstorms in Italy, have led to significant insured losses. 

The report notes an increase in strike, riot, and civil commotion (SRCC) events, along with political violence (PV). These threats are becoming more frequent and severe, particularly in politically unstable regions. The report advocates for advanced modelling techniques and innovative risk transfer solutions.

Challenges in casualty lines include growing liabilities related to persistent pollutants like PFAS and risks from autonomous vehicles. The industry needs to rethink traditional reserving strategies and adopt more granular approaches to manage long-tail liabilities.

Looking ahead, the report further suggested that the future of the (re)insurance market will focus on resilience, adaptability, and innovation. It offers detailed proposals for new solutions, such as enhanced reinsurance structures for European flood and hail events, innovative parametric products for SRCC and PV exposures, and advanced liability management strategies in the casualty sector.