The global insurance industry is undergoing extreme change. The change is brought on by the rapidly evolving risks that the industry is facing. As risk changes, insurers are feeling pressure to become more adaptive and resilient against emerging threats. The Willis Groups, one of the world’s largest insurance brokers, believes that captive insurance companies could be the key to weathering the storms of the future. Joe Plumeri, CEO of the Willis Group, attending this year’s World Captive Forum in Miami, Florida, highlighted the usefulness of captives to insurers around the world.
Plumeri notes that insurers will have to operate in a more dynamic fashion in order to withstand a future filled with unpredictable risks. For the majority of its existence, the insurance industry has been a reactive business. Only recently have insurers begun taking aggressive steps to preempt potential disastrous events, such as cybercrime and natural disasters. Plumeri cited a major disaster that wiped the city of Miami off the map in 1926. In that year, the storm now known at the Great Miami Hurricane caused more than $124 billion.
The damage caused by the storm was so severe partly because of the sluggish response from both the insurance industry and the federal government. Plumeri claims that captives could bolster the longevity of insurers as they help companies manage their risk more effectively. If insurers are to take future risks seriously, they will certainly have to find ways to be more aggressive in their approach to protection and mitigation.