Helping customers prepare for the challenges of 2021
This time last year, few could have foreseen all that 2020 had in store. We are currently in the midst of the sharpest and deepest global recession in our lifetimes, with COVID-19 continuing to dominate both the risk management landscape and almost every aspect of our lives. As we close the year, how do we make sure that we are prepared to withstand the challenges of the new normal? And how are we as an industry helping our customers navigate this perfect storm?
Even before the pandemic, the market was trending toward difficult conditions. Now, accelerated by COVID-19, our customers are operating in a time of unprecedented uncertainty, dealing with budget constraints, capacity crunches, increasing losses and rising premiums, as well as a drastic increase in cyber risk with most workplaces going remote.
Undoubtedly, 2020 has thrown multiple challenges our way. A recent Swiss Re Institute publication indicated that global resilience has fallen by nearly 20% this year, largely caused by the COVID-caused economic slowdown. The US faces a steep economic contraction this year and will see its fiscal buffers depleted the most of the major economic powers. However, the US's relatively small dip in the resilience rankings masks the resilience divide between the resilience champions, such as Switzerland and Canada, and other countries.
In North America, our resilience was tested by more than COVID and the economy. We witnessed a record-breaking hurricane season, with12 named storms and six hurricanes making landfall in the U.S. this year. The Gulf Coast has been hit repeatedly. Parts of southern Louisiana were devastated by Hurricane Laura in late August, which brought 150 mph winds and then were impacted again by Hurricane Delta and Hurricane Zeta in October.
Innovating for our customers
The pandemic has made all of us more aware of risk. Overnight, risk managers have been tasked with guiding their organizations through the challenges of this year, staying abreast of the emerging risk landscape and seeking out solutions and innovations that would respond to those new risks efficiently.
Given the current constraints of the market, the demand for alternative risk transfer options has grown. I am proud of our advances in that space. Our parametric solutions help make our customers – like the State of Utah – as well as our customers' employees and communities, more resilient in the aftermath of hurricanes, earthquakes, and other perils.
We recently introduced our virtual captive solution for middle market customers, who we've seen have a growing interest in captives. In a hard market environment, a virtual captive offers the added flexibility of self-financing risk while simplifying the complexities of setting up a traditional captive.
Finally, we have invested in partnerships that truly elevate our technology game. From Coefficient to Hitachi, we've been working hard to deliver data-driven solutions that help customers accelerate their digital transformation, minimize risk and insure against unexpected business disruption. We've also continued to enhance our platforms, digital processes and online servicing capabilities that help simplify managing multinational insurance programs.
Leading with thought
Amidst this spike in risk awareness, loss prevention and preparedness have become a crucial part of any risk strategy. Earlier this year, when many of customers were facing temporary operational shutdowns to help stop the spread of COVID-19, we published a number of risk engineering guides to help safely shutdown, restart and disinfect operations. And, in anticipation of what turned out to be a record hurricane season, we advised clients on windstorm readiness during a pandemic. We also launched an ongoing webinar series to help our customers better anticipate and mitigate risk.
Starting a new chapter
This year has had a significant impact on our industry, but even more so on all of our lives. As we look forward to the new year, it is important that we continue to take care of ourselves, those close to us and each other.
2021 is likely to present its share of risk challenges. The pandemic is expected to stay through the winter, although successful vaccine trials are giving many of us hope. I anticipate millions of people to remain working remote for most of 2021, further accelerating digital transformations, changing business models and shifting customer behaviors.
The difficult insurance market is likely here to stay as well, with its unparalleled demand for innovative solutions, efficient implementation and a comprehensive risk partnership approach. We will continue to work closely with you to help you stay prepared, protected and more resilient as we advance corporate insurance together.