Pandemics are uninsurable, climate change is the real challenge

In 2020, global insured losses from natural catastrophes amounted to $81 billion.

Nima Motazed, managing director and head of Swiss Re SlovakiaNima Motazed, managing director and head of Swiss Re Slovakia (Source: Courtesy of Swiss Re Slovakia)

While insurance companies calculate all types of risks in their risk management models, including a major regional pandemic, a global pandemic like Covid-19 is uninsurable. The world has to look for solutions other than insurance.

“The pandemic has affected us, but we cannot forget about climate change,” Nima Motazed, managing director and head of Swiss Re Slovakia, told The Slovak Spectator. “Mitigating it is a common effort of all of us – governments, the public sector, the private sector, and individuals.”

The Slovak Spectator spoke with Motazed about the pandemic and the challenges it has posed to the insurance sector, big data, machine learning and artificial intelligence. The managing director also discussed the anniversary Swiss Re will mark in Slovakia.

The Slovak Spectator (TSS): What impact has the Covid19 pandemic had on the development of the insurance and reinsurance market in the world?

Nima Motazed (NM): From the operations point of view, we have seen a huge shift to digitalisation accelerated by the pandemic. Every single industry had to take a very close look at how to serve customers better and more flexibly in purely virtual times, how to reflect their needs immediately and present solutions ahead of time.

From the expert angle, all risk management models in the insurance industry are dealing with a major pandemic. Every insurance company has tried to reckon with the pandemic in its models in the past because you can’t afford to be unprepared if something like this happens. What the insurance sector did not consider and what happened was that the economy started to shut down, massively and quickly. So, we have seen disruptions in businesses and the cancellations of events and activities.

In terms of financial impact, our 2020 annual results reported $3.9 billion in losses from the Covid-19 pandemic and $1.7 billion due to a higher frequency of natural catastrophe events. We have implemented a very cautious approach and made reserves related to the pandemic. We also had to act quickly. Reinsurance is the last line of rescue, the last layer that absorbs financial shock.

TSS: How has the pandemic affected the operation of your company here in Slovakia?

NM: We are a risk managing company, so we have this risk managing approach in the way we operate; business continuity planning is something we have a very strong focus on. Several years before the pandemic, we implemented the Own the Way You Work model, which empowered our employees to choose how and where they worked, so they are used to working from home. Our robust IT systems allowed us to switch our operations to the virtual space within 24 hours. I can remember that day in March 2020 very well.

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