The coming casualty catastrophe market

In this IIL reinsurance presentation, hosted by Moody's office, Robert Reville and Amanda Lyons talk about the recent rise of new mass litigation in the United States and describe how new innovative reinsurance products can help the industry manage the exposure while growing the casualty reinsurance sector.

Recent years have seen mass litigation emerge in the United States, from talc and Roundup to PFAS and addictive software, with unprecedented frequency. In particular, from 2016-2022, two to three new mass litigation episodes launched in the United States every year. In the coming years, climate litigation may accelerate, and whole new types of litigation, such as ultra-processed food and microplastics, may emerge. The result is that insurers are facing an increasing fraction of their portfolios exposed to large-scale correlated litigation, raising the risk of legacy claims and increased frequency of reserve restatements.

The risk environment in casualty is beginning to echo the catastrophe-exposed risk environment that emerged for property insurance in the 1990s, which led to the rise of a catastrophe reinsurance market and insurance-linked securities. Will a similar market emerge in casualty? In this presentation, the speakers describe potential new reinsurance products that can help insurers manage the volatility associated with the new casualty risk environment. These may include increased reliance on runoff and clash, as well as new ways to increase coverage certainty and efficiency, relying on named peril coverage priced and structured using models. The speakers envision a significant growth opportunity for casualty reinsurance and ILS, and will present estimates of the potential size of the market.

Learning objectives:

• How social inflation has increased 'casualty catastrophe' risk in the United States
• Size and status of new mass litigations, including PFAS, talc, and climate litigation
• How new reinsurance products can help the industry manage the risk and provide a growth opportunity for casualty reinsurance

Lunch will be provided by Moody's from 12pm.

Chair: Rachel Sullivan, Partnership Strategy Manager, QBE Re

Please note that this event will not be recorded.

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