The insurance industry is likely to turn to parametric products to address rises in strikes, riots and political violence, Howden Re says.

Evolving perils are increasingly interconnected and severe, and the broker says bespoke solutions are needed for the challenges facing different regions and lines of business.

Collaboration and expert judgment setting parametric triggers for civil unrest will be required, it says in a report called Beyond the Horizon: Shaping the Future of Risk.

“The gap between sustaining a loss and making a claim can be extensive, with follow-on events such as killings of protesters by police or rival groups breathing new life into unrest and increasing aggregation risk. There is an opportunity for parametric products to fill this gap.” 

The adoption of autonomous vehicles and issues around “forever chemical” pollutants such as polyfluoroalkyl substances also “require the industry to rethink traditional reserving strategies”. A greater emphasis on adaptability and innovation will characterise the reinsurance market, the report says.

Howden Re head of industry analysis and strategic advisory David Flandro said: “The risks we are encountering today are more interconnected and severe than ever before, requiring new ways of approaching risk management.

“Traditional risk management models are being tested and the industry must adapt to meet these new demands and challenges.”

The report also proposes enhanced flood protection infrastructure and exposure management tools to prevent hail damage in Europe.

Howden Re CEO Massimo Reina says collaboration across the industry is essential and “we are dedicated to bringing together the best minds from brokers, reinsurers and capital providers to ensure we are all prepared for the future”. 

See the report here.