Adapting to Climate Change

At the AIE 2024 conference in Sun City, Dawn Miller, Chief Commercial Officer at Lloyd's, provided valuable insights into the pressing issues facing the insurance industry, particularly in the context of South Africa. The discussion centered around the increasing relevance of climate change, with Miller pointing out that the country is experiencing more frequent and severe weather-related events, exacerbated by rapid urbanization. This shift challenges traditional insurance models and necessitates a reevaluation of risk assessment strategies.

Miller explained how Lloyd's is leveraging its extensive data and technical expertise to support the transition to sustainable practices. The marketplace's focus on enabling underwriters to tackle complex and emerging risks is exemplified by initiatives like the TCX (Transition Class Code), which encourages innovation in underwriting guidelines.

The conversation also delved into the broader issue of systemic risks, particularly in the context of technological disruptions. Miller highlighted recent global incidents, such as the fallout from a small component failure in Microsoft's supply chain, to illustrate the interconnected nature of modern risks. She emphasized the need for enhanced collaboration across the industry to develop robust risk management frameworks, particularly in the face of increasing cyber threats.

A significant portion of the discussion was dedicated to the evolving role of brokers. Miller noted that brokers are now required to provide more than just placement services; they must engage in detailed risk assessments, ongoing risk management, and claims support. This evolution is crucial in ensuring comprehensive coverage and risk mitigation for clients.

Lastly, Miller highlighted the role of the Lloyd's Lab in fostering innovation. The lab serves as a breeding ground for new ideas and solutions, with a particular focus on addressing unique risks in the African market. She mentioned the launch of the first African-focused syndicate, African Specialty Risk, as a testament to the region's growing importance in the global insurance landscape.

Highlights

• Climate Change Impact: Miller stressed the increasing importance of addressing climate-related risks, particularly as they affect urbanization and regulatory frameworks in South Africa.

• Systemic Risks and Cyber Threats: The discussion highlighted the complexities of managing systemic risks, such as those posed by technological disruptions and cyber incidents.

• Evolving Role of Brokers: The insurance industry's shift towards more comprehensive risk management approaches was discussed, emphasizing the need for brokers to adapt and enhance their services.

• Innovation and Collaboration: The role of the Lloyd's Lab in driving innovation and supporting new entrants in the insurance market was a key focus, with a particular emphasis on addressing unique risks in the African context.