From Bloomberg Green, August 7:
Today’s newsletter takes you to Texas, where risk management professionals just convened to discuss the billion-dollar opportunity for the industry. Plus, Energy Secretary Chris Wright has been touting misleading findings from his agency’s recent report. For unlimited access to climate and energy news, please subscribe.
The growing business of managing risk
On Monday, risk managers from around the Lone Star State gathered in San Antonio for a Risk & Insurance Management Society’s (RIMS) conference. The 75-year-old association has 10,000 members and 80 chapters globally, but this was its first Texas regional gathering.
The conference-goers represent a growing field. Demand for risk management specialists is expected to go up, with an expected 54,000-plus new US jobs by 2029, according to the online job site Recruiter.com.
Most of those in attendance work for private companies, and a smaller number in the public sector. They are charged with preparing for a wide range of hazards – from cyberattacks to major litigation to natural catastrophes like floods and hail storms.
Helping risk managers prepare is a billion-dollar opportunity, and the halls of the Henry B. Gonzales Convention Center were filled with businesses that would like a piece of the pie. They included BluSky Restoration and Cotton Holdings, which clean up after catastrophes, and consultants such as EY, which was touting its insurance recovery expertise. And then, of course, there were the insurers and insurance brokers themselves.
Several hundred risk managers milled at coffee breaks and a cocktail hour with margaritas and empanadas, and a frequent topic of discussion was that insurance is getting too expensive. Like American homeowners, who have been pummeled by double-digit increases in premiums (often for policies that carry more exceptions and higher deductibles), the commercial world is hurting.
Penni Chambers is a senior vice president for risk management at Hillwood, a Perot Company, which manages industrial properties such as warehouses. “When I started my career 20 years ago, wind/hail deductibles in Texas were a flat fee, like $50,000 or $100,000,” Chambers said in an interview. “Now you have to negotiate it as a percentage of the building, and for a $350 million warehouse, that’s in the millions.”
At lunch one group of attendees wondered how insurance companies can stay in business if they keep raising costs. They reported that a seminar on “captured” insurance – essentially when a company insures itself – was packed.
Even if they didn’t use the words “climate change” – and many here did not – they said that extreme and unpredictable weather is the crux of the problem. It’s hard to know what you are up against and how much insurance is really worth shelling out for when the weather keeps changing.
Josh Salter, a RIMS staffer, expressed a common frustration. The same week last month that Texas Hill Country experienced deadly flooding, he noted, “a one-in-1,000-year storm hit North Carolina, and a one-in-1,000-year storm also hit Illinois. So how accurate can all this data be if we’re getting things that are only supposed to happen once in 1,000 years, three times the same week?”
At one panel on extreme weather, the moderators put up a slide with regional wind and hail events just in May and June of this year. Two had damages in the hundreds of millions of dollars. One crosses the billion-dollar threshold.
“Historical data is not lining up with what we’re seeing right now” in terms of damages, said Chambers. “I think that is a huge concern for a lot of risk managers, because insurance carriers – you know, they’ve got 250 years of data, but that data looks very different now.”....
....MUCH MORE
See also the post immediately below:
"Fish Are Now Starting Wildfires In Canada…"
Sounds like a job for esoteric hedge man.(still working on the pricing)
