Tobias SONNDORFER: climate and cyber related risks will be dominate the risk landscape in the next decade

17 April 2024 — Daniela GHETU
Tobias SONNDORFER: climate and cyber related risks will be dominate the risk landscape in the next decade

Resilience, collaboration, innovation form the mix of ingredients that will help dealing with the increased volatility, Tobias SONNDORFER, Vice-Chairman of the Board of Directors, VIG Re stated at the AM Best's CEE Insurance Market Briefing – Vienna.

“We still have risks that are not insured and new risks that are emerging every day as macroeconomic changes, geopolitical environment, digital transformation and climate change are driving profound changes in the day by day life and the re/insurance business as well,” he explained, thus illustrating the titles under which the event was organized: "Navigating Geopolitical and Emerging Risks"

AM Best's CEE Insurance Market Briefing – Vienna, organized in partnership with XPRIMM, is the first AM Best event fully dedicated to the CEE markets.

Speaking about the most important changes in the macroeconomic landscape, Tobias SONNDORFER said: The inflation and interest rates change after the Covid era were game changers. Claims inflation plus price volatility challenged the re/insurer’s business. Reinsurers’ return expectations changed after the sharp increase of interest rates. Strong corrections were seen in the renewals of 2023. Usually in such a situation one can see new entrances in the market, but this time it didn’t happen.

He also mentioned the climate related challenges. “There is a profound climate development under the impact of climate change – losses are continuously increasing. We have enteres in a new normal. 15 years ago an average NatCat loss year was about 50 bn euro; now we are in the 100 bn euro range. Small local events are contributed to an increasing aggregated loss. The market’s reaction was to withdraw from this line of risk. The consequce is that direct insurers are keeping more volatility in th balance sheet and need to pay more attention to their underwriting.”

As for the role of the digital transformation, he stressed out that it” is getting more and more depth in our world. Consequently, costs of cyber crime are increasing fast, at an CAGR of 30%.“

In fact, in the World’s Economic Forum view, “in a 10 years perspective, climate related and cyber risks will dominate the risks of top severity list.”