Why David Howden fears markets will ‘sleepwalk and become meaningless’

According to the broker boss, the above comments were first made by him at a dinner he attended with 20 insurance company CEOs just before he flew off to the risk management conference FERMA.

“I don’t want to be on stage like this telling people that I’m worried about my lack of relevance with my clients. I have.

If the industry continues to “internalize” due to capacity and pricing issues rather than looking at ways to remove risk from customer balance sheets, it “makes no sense in the future.” Howden said.

“We want to bridge this relevance gap.”

read more: Howden claims ‘fourth global player’ status in deal with TigerRisk

Reflecting on the Monte Carlo Reinsurance Rendezvous in September this year, Howden said:[There was a lot of] Internalization, but no kidding, it was very difficult to find the ultimate client [in the conversation].

“Honestly, we are all in this business for our clients. Without our clients, we are nothing.”

Meanwhile, at risk management conference FERMA, insurance buyers had other concerns.

This is what they are thinking. This is what really bothers clients,” he says Howden.

“They worry about war in Ukraine, social inflation, supply chains, balance sheets, etc.”

“If you remember, if you’re the CEO of a company […], instead of thinking in terms of insurance risks, think about problems and problems. How can I grow my business? And this is what they are all wondering. “

“When you plot it against what we offer as an insurance market, it doesn’t always match well,” said Howden. “You know, we’re not always there.”

Howden lays out his argument that insurance as it stands may be heading in a nonsensical direction, arguing that property and casualty premiums have not “actually grown much faster than inflation.” did.

He pointed to recent market developments in which large companies are responding to capacity shortages by unilaterally striking out. Airbus said in May that it would consider setting aside 10 billion euros for booking purposes after being plagued by COVID losses, the Financial Times reported.

“Where was the insurance on it?” Howden asked. “Anywhere”

Airbus is also one of seven multinationals, including BASF, Michelin and Solvay, to set up cybermutual MIRIS, founded in Belgium, which will offer members up to €25 million in capacity.

€10 million is the lowest attachment point for companies looking to join a mutual.

It wasn’t just the limit. It was also about: [the insurance industry] payment? ” said Howden.

“We have to consult, we have to manage risk, but we have to respond as well. […] If not, people go ahead and set up mutuals. “

“Smart Capital” is looking to invest in brokers because they show better returns.

The flow of money into brokers instead of balance sheet businesses could cause problems for the insurance industry and exacerbate the pressure on the capacity side, broker bosses said.

“You probably care because eventually you have to transfer risk,” says Howden.

Howden pointed to climate change as where the insurance industry’s biggest chance to stay relevant is.

read more: Howden Launches First Carbon Credit Insurance Product

“I’m not going to get into a political debate about what drives it. It’s a fact – it’s happening,” he said.

“Another fact is that this is happening in all sorts of different ways that we haven’t seen before. That’s why our models are all wrong. All kinds of losses that I never knew or thought would happen here today.”

Achieving carbon neutrality by 2050 will require $125 trillion in investment, and $32 trillion over the next decade alone.

“It would be a shame if we, as an insurance marketplace, do not offer and support the greatest capital movement you have ever experienced. What an opportunity loss for