Pat Ryan, head and founder of broker/consultancy Ryan Specialty Group, said on Monday September 19th that he thought a global recession was “highly likely”, while also warning of the need for careful wordings when it came to future contracts where complex technology was involved.
Giving a keynote address at this year’s IUMI conference in Chicago, Ryan said that social inflation when it came to claims was a fact of life. Insurers and brokers could not change it, but it can learn to deal with it.
Ryan said that marine was at the nexus of the whole supply chain and had therefore to deal with a whole range of issues, many of which have been exacerbated by recent economic turmoil. Inflation was a serious problem and there would be considerable pressure on currencies and balance sheets. Assets were being marked down, while many policies had been underwritten under the assumption of much lower interest rates than were ow coming into play.
Ryan warned of the potential dangers even in the short term. “What will happen if there is a very cold European winter? There could be a lot more supply disruption and some European industries might have to shut down.”
He said that he came down on the “highly probable” side of a forthcoming recession.
Ryan warned that claims were getting larger not just because of social inflation, but also as a result in changes in technology. Other serious threats to claims levels were risk accumulation because of a concentration of the amount of cargo in a single place.
Ryan said that one thing which insurers should pay close attention to was wording, because if a case came to court and the wording was ambiguous, it would be very hard to persuade a jury to come down on the side of the insurer.
“Clear and concise wording could save a lot of money”, he said.
Ryan noted that with the increase in the amount of cyber risk and the appearance of exclusions, some companies had returned to the concept of group captives, simply because they were finding some layers hard to fill.