Gordon McBurney, President and CUO of Liberty International Underwriters delivered the keynote address to the HMIS and warned that currently insurers were not addressing he interconnectivity of risk in any adequate level.
He said: “We are still underwriting in silos and not paying enough attention to the interconnectivity of the risks we are being asked to assume.”
Mr McBurney warned the size and scale of the risk insurers were now exposed to was growing with broker Aon warning it would take a $50 billion net major insured loss to move the market while Lloyd’s had estimated the figure at around the $80 billion mark.
“To me this is real money and the market has to address the way in which we deal with such risk,” he said.
Mr McBurney said the deep water the insurance market faced was not just the losses which will arise from the Macondo well loss.
“As we have seen in recent years how a hurricane in Louisiana can impact on the business interruption of firms thousands of miles away and how a volcanic eruption can have an effect on businesses all over the world.”
He said however the news was not all bad.
“Those firms which seek to fully understand the systemic nature of the risks they face and take steps to mitigate it can turn what is a serious challenge into a clear business advantage,” he added.