totsure log

Pre-empting macro perils

An open collective to help the insurance sector and government better plan coverage for any catastrophic pan-economic event.

The Declaration

We the collective invite colleagues across the insurance sector, and partners in U.K. government, to join us on a collaborative mission to address the super-perils present to the UK. We acknowledge that they expose the lack of coherent risk transfer between what the private insurance market capacity can underwrite and where the government’s role begins. This “Society Insurance Gap” needs to be closed with certainty and via a replicable and sustainable sector-wide mechanism. 

It is not sustainable to expect the current Pandemic Response to set a precedent for National Risk Management. We, therefore, call for a “Totus Re” to be compiled. A Government-backed reinsurance umbrella for all known or foreseeable perils. Structured, cell by cell, including and appraising each risk in turn, and grouping the existing structures of Pool and Flood. 

Whilst the Covid Pandemic is an ongoing human catastrophe - affecting the entire economy and insurance sector - it has revealed the existence of what is best described as a clear and present “Society Insurance Gap”. That being: the uninsured or uninsurable losses of a National Disaster Scenario. 

As some focus on creating a reinsurance platform backed by government for the next pandemic, we believe this isn’t proactive enough. We must think beyond the current peril. There will always be another sizeable aggregate event around the corner. 

The National Risk Register contains known and reasonable aggregate risks. Yet, even that does not contain considerations for other sizeable loss events. These may sound far fetched, however, that makes it all the more reasonable to raise them, discuss them, and plan for them. If we are to patch the pandemic risk gap - why stop there? 

Internet Outage. Space Debris. Meteorites. Solar Storms. Shifts in the Jet Stream. Whilst this list sounds like science fiction - none are beyond the realms of possibility. This list is likely far longer. 

At what point does the market exclude and the government include? What is society’s share of the “claim”? This triumvirate of uncertainty must be resolved. The United Kingdom has pioneered the insurance sector, let’s unite with government and society to solve the inevitable schism before the event. 

This task is not political. It is not embarked on with profit motive. It is a collective effort to open a dialogue and close the Society Insurance Gap. 

When that is closed, certainty is created. With certainty comes confidence - in our economy and our ability to endure the risks our society inevitably faces in the course of natural time.

Society Insurance Gap

This is the undefined exposure that sits between the private insurance market, government and the self-insured retention of society.

CO-CREATORS

LIZ FOSTER DL

Non Executive Director at the Society of Insurance Broking

Liz Foster

JAMES YORK

Deputy Chair of Insurtech UK

James York

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