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Reinsurance Markets and the Future of Trading Large-Scale Risk

Reinsurance was the hot topic – with more than 180 people packing the main auditorium at the Business School to hear Cass academic Paula Jarzabkowski and an expert panel thrash out the big industry issues.

Reinsurance was the hot topic – with more than 180 people packing the main auditorium at the Business School to hear Cass academic Paula Jarzabkowski and an expert panel thrash out the big industry issues.

Reinsurance Markets and the Future of Trading Large-Scale Risk presented the findings from Professor Jarzabkowski’s unique and ground-breaking book, Making a Market for Acts of God, about the practice of trading risk in the global reinsurance industry.

Welcoming guests to the event, Professor Steven Haberman, Dean of Cass Business School said: “I think the last time the auditorium was this full we had (Governor of the Bank of England) Mark Carney here!

“I’m reading Paula’s book at the moment and it’s really fascinating – I’m learning a lot – and it’s raised a lot of industry discussion.”

Reinsurance panel  

Professor Jarzabkowski was joined by the following industry experts to continue the debate she’s generated on reinsurance:

  • Tom Bolt, Executive Team member and Director of Performance Management at Lloyd’s of London;
  • Clem Booth, (re)insurance industry veteran, formerly executive board member of Allianz SE and CEO of Aon Benfield Global Inc. and many other executive positions in the industry;
  • Michael Power, Professor of Accounting, and former Director of the Centre for the Analysis of Risk and Regulation at LSE.

The expert panel debated the implications for the future of trading in large-scale risk and reflected on the lessons we can learn from other financial markets, such as the banking sector.

Professor Jarzabkowski said: “It was great to bring together people across all areas of the industry - insurers, reinsurers, brokers, modellers, lawyers, as well as from banking and insurance linked securities - to talk about the implications of industry change.

“In particular we discussed the possible unintended consequences of these changes and whether they pose a danger. Obviously, this is an industry we all want to remain stable in terms of providing effective cover for risk - and therefore ability to pay claims - even as it goes through change.

"We’ve done serious scientific research into this industry and I welcome the informed debate that our event raised. Anything that increases transparency about the most effective ways to increase high quality insurance cover, properly backed by capital support is a benefit to society and the economy.

"The experienced panel provided some great informed commentary. Clem Booth, an industry veteran with years of experience as a supplier, buyer and intermediary and currently chairman of Euler Hermes reflected insightfully on the way that large buyers are looking for efficiencies, in which reinsurance is just one source of capital - even as he also emphasised that payback and relationships would always be critical for an industry that deals is such volatile and uncertain risks.

“Tom Bolt, Director of Performance Management at Lloyd's of London noted that, while it is always possible to make money in a commodities market, reinsurers were also shifting to more transactional views of trading as risk was becoming more commoditised.

“Professor Mike Power from the London School of Economics reflected on the previous culture of collaborative competition that has allowed reinsurance to be a very self-regulating industry, inviting less external regulation and scrutiny than the competitive culture that pervades banking. Yet the shifts currently occurring may also change the ability to self-regulate and so change regulatory scrutiny.”

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