Corporate insurance buyers from around Europe are gathered in London today and tomorrow for the annual conference of the Federation of European Risk Management Associations (FERMA). FERMA conducts a wide-ranging survey of risk managers every two years, and the latest poll was released at the start of today’s gathering.
Among other issues, risk managers were asked to rank their top concerns about the insurance market. The ability to identify (and, ultimately, insure against) future risks was, unsurprisingly, respondents’ biggest worry. The second-ranked concern in the survey was a looming hard market, although an informal poll of the conference audience during a panel discussion suggested that this fear may be overdone. The looming impact of the Solvency II regime on the cost and availability of insurance ranked third.
Much of today’s discussion focused on the lessons to be learned by insurance buyers from the recent financial crisis. Constant vigilance against unlikely “tail risk” scenarios is an obvious conclusion, but as one panellist put it, insurance alone—however wisely deployed—is not enough to mitigate the damage of large magnitude events like the credit crunch. In other words, not all risks can be managed, even by the best risk managers (and their preferred insurers). The element of chance was fittingly underscored by a large poker tournament taking place in the same hotel as the risk managers’ conference. “It’s not that far away from what we do,” a speaker quipped.