A licence to think the unthinkable must surely be the lesson from 2020 for insurers. The year will be defined by the Covid-19 pandemic, which has caused 1.3m deaths so far, and economic damage maybe worse than the 2007-08 financial crisis.
But who could also forget the human and economic wreckage caused by a devastating Atlantic hurricane season and wildfires that have decimated large parts of Australia and California.
To top it all, an asteroid of 5-10 metres diameter – about the size of a London bus – missed the Earth by just 386km on Friday 13 November – but it was only spotted 15 hours after its closest approach.
Nasa says an asteroid would need to be at least 25 metres across in order to wreak localised damage on the Earth's surface.
Nonetheless, sizeable space objects have surprised us in the recent past (see the Chelyabinsk meteor of 2013) so insurers should never dismiss the chances of having to pay out claims from events as fanciful as a scene from a Hollywood film.
On a more microscopic scale, the potential for viruses to cause global economic disruption was highlighted as recently as the Sars epidemic of 2002-04. Nobody should have the cheek to call Covid-19 a black swan event.
Reflecting on the lessons learnt from the Covid-19 crisis is the keynote panel discussion in next month’s Insurance Risk & Capital EMEA virtual conference.
Experts in the panel include Axa's group chief risk officer (CRO), Renaud Guidée, Simon Gadd, Legal and General’s group CRO, Beazley’s CRO, Andrew Pryde and Jad Ariss, managing director of the Geneva Association.
The consensus among the experts is that 2020 has reinforced the need for insurers to expect the unexpected and have an understanding of the tail risks on their radar, however unlikely they may seem.
The CROs note the value of regular stress testing, scenario planning and managing people risk to build operational resilience.
Readers might also watch the panel session on business continuity planning, where CROs discuss the next big extreme risk to worry about.
To hear the experts' insights on the insurance lessons from Covid-19, register for the conference, and view the agenda, by clicking here.