By David Bull
Feb 3 - (The Insurer) - Marsh McLennan president and CEO John Doyle has stressed that the focus in the aftermath of the California wildfires should be on efforts to “build back with greater resilience”, rather than how to support the state’s Fair Plan or create subsidies for insurance.
Doyle was asked by analysts on the company’s Q4 earnings call on Thursday about the likely impact on the property (re)insurance market based on an insured loss in excess of $30bn.
The executive suggested that so far the impact on market conditions has been limited following the “devastating events in Southern California”.
He said the firm’s focus is on helping affected colleagues and clients to recover, including relocation of families, claims preparation and filing claims with insurers, and then the rebuilding effort to come.
Doyle said Marsh McLennan’s role as a business is primarily as an adviser to high-net-worth homeowners, and that the wildfires are not overall impactful to the firm from a financial perspective.
“But as a major risk adviser, we certainly have something to say about the future and efforts to build back with greater resilience. And I would say reading lots of comments about how to support the Fair Plan or how to create subsidies for insurance, candidly, it's the wrong conversation.
“The conversation we should be having really is about building greater resilience into these communities rather than trying to find ways to subsidise insurance. That will lead to happier homeowners and residents of Southern California and other cat-prone areas over time,” said the executive.
He added that the conversation is not limited to Southern California and that “important steps” need to be taken to address such challenges.
In prepared comments at the start of the call, Doyle had said that even at $30bn the Los Angeles wildfires would register among the top 10 largest natural disasters in terms of insured losses.
“The increasing frequency and severity of natural disasters, along with rising property values and continued development in catastrophe-prone areas, underscore the need for greater resilience and risk mitigation planning.
“Marsh McLennan will continue to bring together stakeholders including individuals, businesses, the insurance industry and governments to build the resilience to mitigate the devastating impact from these catastrophic events and to accelerate recovery,” he continued.
LA wildfires losses could temper reinsurance rate reductions
Guy Carpenter CEO Dean Klisura said the reinsurance intermediary is committed to supporting its clients as they navigate the complexity of the wildfire losses, adding that the firm has set up a dedicated wildfire task force including meteorologists, cat modellers, analytics colleagues and brokers.
“It’s clear many of our reinsurance clients will have losses resulting in claims to their reinsurance programs.
“The impact on the reinsurance market is uncertain at this time and will certainly depend on the ultimate magnitude of the reinsurance loss. But I would say … at this stage, the risk-adjusted rate reductions that we witnessed in January 1 could certainly be tempered moving forward as we go into the April 1 renewal season,” he commented.