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After the shock - insurance in 2021 and beyond

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After the shock — Insurance in 2021 and beyond 19 Commercial lines: Data, expertise and a hardening market Complex commercial insurance promises the greatest gains (high premiums) but also carries the greatest risks (high level of exposure). For insurers playing in this market segment there is a continual balancing act between premium revenue generation and risk exposure. Strategy decisions around product lines, geographies, levels of reinsurance, pricing and various other factors are paramount to profitability and long-term sustainability of commercial lines insurance companies. In the previous chapter of this report, I discussed the changing business landscape. Key trends such as the emergence of the gig economy and the growth of online retail are irrevocably changing the face of the many industries. Whilst these trends are certainly of interest to providers of complex commercial insurance – especially surrounding the growing demand for cyber insurance – there are more notable factors impacting underwriting performance. The frequency and severity of natural disasters is on the rise. In the four decades prior to 2020 we have seen a steady increase in loss-causing natural disasters. According to MunichRe 33 data, total losses as a result of natural disasters since 1980 amount to US$5,200bn. We can see from the accompanying graph that these losses are inclining upwards as the years go by, indicating that losses are on the rise. Insurers seeking to operate in a profitable manner must navigate a challenging claims environment. 33 https://www.munichre.com/en/risks/natural-disasters-losses-are-trending-upwards.html#-1624621007 Data and Image: MunichRe

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