RenRe’s Manson: Industry is actively collaborating to address climate concerns

Reinsurers' concerns over collaborating in a competitive environment have been overtaken by the mounting challenges presented by climate change, according to Jeff Manson, RenaissanceRe’s SVP of underwriting and head of global public sector partnership.

“The challenges that we're facing as a society are so enormous, that an individual company doesn't have the scale to be able to really address it,” Manson told The Insurer TV from the sidelines of the 2024 Bermuda Risk Summit.

“If the knowledge around understanding risk is pooled, and more importantly shared, that's where you can really start to see benefits,” said Manson.

Historically the industry has been cautious about collaboration owing to concerns around antitrust regulations. But Manson has routinely argued that the (re)insurance sector should more widely share risk knowledge.

And some organisations have heeded the calls for collaboration from Manson and others, with the creation of the industry-supported Insurance Development Forum, Sustainable Markets Initiative and ClimateWise.

“It's the risk knowledge sharing that helps to promote trust and understanding, because risk transfer, financial risk transfer, is a very important element to reducing the protection gap.”

Holistically understanding these risks also better informs attempts at mitigation and adaptation, explained Manson.

“You can use understandings around … what is your risk exposure, to better manage urban development, land use planning, physical resilience, infrastructure. That's where the risk expertise and knowledge sharing from the industry is going to be very helpful.”

Other green shoots include public-private partnerships such as the Global Risk Modelling Alliance proposed by the V20 group of climate-vulnerable countries, the Resilient Planet Data Hub and Tripartite Projects, according to Manson.

Open source modelling

Another bright spot in climate collaboration is emerging open source catastrophe modelling platforms such as Oasis.

“Academics can build models for it and not have to pay licensing fees. Private vendor companies can voluntarily provide some of their models on this platform, but most importantly, it allows sovereign and sub-sovereign actors to really start to get engaged in the process and build confidence around understanding the numbers,” said Manson.

Understanding cat modelling was core to RenaissanceRe’s beginnings three decades ago as a start-up leveraging the then nascent technology. Manson said the firm continues to build on and evolve from that quantitative technical approach.

“We're talking about modelling … natural systems mathematically, it's incredibly complicated, and you're never going to get it perfect … but we have a reasonable degree of confidence, a high degree of confidence in our understanding of these perils.

“I'm confident that we are incredibly well positioned to help be an agent for positive change in transitioning the economy to a lower carbon state,” he added.

New tools will likely help the company validate its assumptions and perfect its workflow.

“As AI comes on board, that's going to introduce even more opportunities to help augment how we approach our understanding of the natural environment and the climate change challenges that we're facing.”

Manson also notes that the firm is ideally located in Bermuda.

“Bermuda contributes to 35 percent of the global reinsurance industry, which is an incredibly large number considering the size of the island. And, you know, over the past 25 years, Bermuda reinsurance companies have paid out over half a trillion dollars in economic recoveries to US policyholders, which is a pretty meaningful amount.”

The island territory is focused on sustainable practices and well equipped to deal with climate challenges, according to Manson, with a respected financial regulator along with a world-class science and climate research institute.

But he’s not naive about the global headwinds that may be ahead.

“Our society or civilization right now is arguably in the most prosperous place of opportunity it's ever been. We've got eight billion people living on the planet [and] a lot of the abundance and the prosperity that we're experiencing today is actually based on borrowing from our future.

“I think it's a really sad future if we look forward and think that our children won't have the same opportunities that we've had, because we've basically spent their future.”

Watch this 17-minute video to learn more about:

  • Why concerns over climate change have trumped industry fears around collaboration
  • The benefits of industry-wide collaboration
  • Why financial risk transfer is a key element to reducing the protection gap
  • How understanding risk aids in climate change mitigation and adaptation
  • The bright spots emerging from public-private partnerships