Uninsurable risk, 150% rate increases and why we're at a 'tipping point'

The good, the bad and the ugly – we've certainly had a healthy dose of each in the insurance industry over the past year, so it's high time to turn the page and look toward 2023, where we'll work toward a lot more of the first and a lot less of the other two.

But first, some high- and lowlights making the headlines over the holidays.

Let's start with "the bad." The list of risks becoming increasingly difficult to insure is long and getting longer – natural catastrophes, cyberattacks, retirement savings, etc. But one, in particular, has emerged as a huge challenge in 2023, according to?EY's?Isabelle Santenac.

More "bad" on the weather front, where Winter Storm Elliott delivered delivered extremely frigid temperatures and whiteout blizzards resulting in $5.4 billion in insured losses across 42 states, according to the latest estimates from? Karen Clark & Company .

As far as potentially uninsurable risks... while natural catastrophes have stolen much of the headlines in recent years, it's the "ugly" disruption from hackers that sits atop the systemic risk list, according to?Zurich Insurance?Chief Executive Mario Greco.

Add it all together and the insurance industry finds itself at a "tipping point," with this renewal season sparking an "epiphany," according to SiriusPoint'?Ari Chester. He said there is a sudden awareness that "insurance balance sheets need to be compensated for property volatility. And it’s not just rate. The bar is rising with risk selection."

When it comes to the property market, reinsurers are "firmly in control," and that won't likely change heading into 2023, according to analysts at?JMP Securities LLC. A combination of inflation, poor investment performance and weak results at the same time insurers are looking to reduce earnings volatility have led to a structural reset and a true hard market for property reinsurance for the first time in decades.

And with that... rate increases of up to 150%! No, really, that's what Stonybrook Capital says it has witnessed in some cases. Overall, however, the strategic advisory reports that reinsurers are achieving north of 35% rate increases for in property and catastrophe reinsurance renewals, with expectations for the hard market conditions to persist.

It's taken a turn for the "ugly" out there for #insurtech, according to Clark Hill Law 's Robert Tomilson . “The 2015-2017 class of insurtechs have chassis built for speed but the roadway will be whipped from under them,”?he told?InsuranceNewsNet. Despite clouds of uncertainty, compound annual growth rate is predicted to be a whopping 52% through 2030.

How about a splash of "good" in the form of cultural growth? Diversity, equity and inclusion (DEI) will certainly remain a focus going into 2023. Look no further than the panel of insurers leaders who gathered to share their thoughts on this important topic.

Ready for the four-day work week? There's plenty of hesitancy, of course, but there's also a case to be made that an extra day off could improve sales, lower burnout and lift satisfaction. And we all know the insurance industry needs to find ways to attract young talent.

Before we bid adieu to '22, how about some resolutions? Share your thoughts on how to embrace the New Year, both professionally and, if you're up for it, personally!