“We need to get our minds around these risks and the aggregation around that so that we can make sure we’re still here to pay the claims when the bad stuff happens,”said Sompo International’s CEO of EMEA and president Asia and LatAm.

But James is also concerned about the “unprecedented change and challenge the world is going through”. 

The challenges facing the wider economy are affecting companies worldwide, posing an increasing number of newer risks for the (re)insurance industry, he said.

Speaking to The Insurer TV, James said, “there is so much going on in the wider economy and that throws up many issues for risk managers. We’re here in times of massive economic uncertainty which is leading to big issues for the industry”.

He added: “Looking at the economy, we’re entering a period of high inflation and if we think about what that means, it means the cost of claims is going to increase, it means the cost of rebuilding basic things is going to increase, and it means that companies themselves are going to have to weather the impact of those inflationary demands.”

James also referenced the impact high inflation will have on insurers - particularly in relation to the holding of reserves against an assumed interest rate which now everyone is having to adjust.

“It’s also affecting the asset side of insurers and therefore the solvency and capitalisation of the industry is a very important issue,” he added.

But at the same time, it is important for clients to grasp how the (re)insurance industry is adjusting to these unprecedented times to be able to help mitigate risk effectively.

“It’s important for clients to understand how insurers themselves are dealing with their own solvency requirements in high inflationary times,” he added.

James also pointed to geopolitical disruption elsewhere in the world leading to potential trade disputes and issues around supply chain management.

“It’s important that everyone understands both sides of the fence and what’s happening,” he said. 

Briefly, on the conflict in Ukraine, James said that on certain lines of business, it had changed the “risk parameters”.

During this nine-minute interview, James discusses:

  • His expectations ahead of Airmic 2022
  • How economic uncertainty is changing the (re)insurance landscape
  • Changing risk parameters created by the Russia-Ukraine conflict
  • How Sompo is adapting to industry challenges and his role at Sompo International