I’m thrilled to sit down with Simon Glairy, a trailblazer in insurance and Insurtech, whose deep expertise in risk management and AI-driven risk assessment has reshaped how the industry confronts complex global challenges. With a career dedicated to bridging traditional insurance models with cutting-edge innovation, Simon offers a unique perspective on navigating systemic risks like extreme weather and cyberattacks. Today, we’ll explore how insurers can rethink market structures, harness alternative capital, and foster mission-driven collaboration to address uninsurable gaps and build a more resilient future for the industry.
How can insurers address the growing gaps in coverage caused by systemic risks, particularly through innovative approaches like cross-line modeling?
I’ve seen firsthand how systemic risks—like catastrophic cyberattacks or extreme weather events—create grey areas where traditional coverage just falls apart. Take the statistic from Australia, where 25% of property is now deemed uninsurable due to climate-related perils; it’s a stark reminder of how segmented risk models push problems around rather than solve them. Cross-line modeling is a game-changer here—it’s about looking at risks holistically, across business interruption, property, and cyber lines, for instance, to create a unified picture. Shared-risk pooling, where insurers, reinsurers, and even capital providers collectively shoulder the burden, has shown real promise. I recall a case in Europe where a consortium of insurers pooled resources to cover supply chain disruptions post a major geopolitical event; they reduced individual exposure by 30% while ensuring clients weren’t left stranded. It’s not just about spreading risk—it’s about creating a sense of shared responsibility that makes the impossible insurable.
What’s your perspective on the rise of mission-led innovation in insurance, and how does it balance prevention and cost across different stakeholders?
Mission-led innovation is a return to the heart of what insurance should be—supporting people and society at their most vulnerable. I’m inspired by how some European insurers are embedding social and environmental goals into their products, striving to prevent loss rather than just paying claims. But the challenge lies in the structural misalignment: often, the party that benefits from prevention isn’t the one footing the bill. I worked on a project a few years back where a carrier invested in community flood defenses—reducing claims by 15% in high-risk zones—but struggled to justify the upfront cost when competitors undercut premiums without similar investments. The success came through partnerships with local governments who shared the cost, proving that alignment is possible. It’s a slow grind, but when stakeholders see long-term value—like safer communities and lower losses—the emotional buy-in is palpable, and that’s what drives real change.
Can you explain how alternative capital structures are transforming the industry’s ability to fund systemic risks, and what does this look like in practice?
Systemic risks are notoriously hard to fund because historical data often fails us, leaving massive capacity gaps. Alternative capital structures, like the £140 million cyber cat bond facility pioneered in the industry, are unlocking vast new pools of money from private investors who are hungry for diversified, high-return opportunities. In practice, it works by packaging risk into tradable instruments—think of it as a bond where investors get returns if a cyber catastrophe doesn’t hit, but lose their stake if it does. I’ve seen private equity firms jump in, lured by the chance to access reinsurance risk without owning an insurance company, often brokered through carriers who act as conduits. It’s like watching a high-stakes poker game unfold at a conference table—the tension of potential loss versus reward is electric. These structures don’t just build resilience; they redefine who gets a seat at the risk table.
How do you see the future of insurance ventures evolving, especially with leaner, partnership-driven models focusing on niche innovation?
I truly believe the future belongs to smaller, agile ventures that don’t try to do it all. Instead of building sprawling operations, these entities will zero in on a single innovation—say, a new way to underwrite climate risk—and lean on partners for everything else, like data analytics or distribution. Picture a startup developing a cutting-edge flood prediction tool; they might collaborate with a major reinsurer for capital backing, a data firm for real-time weather insights, and a broker network to reach clients. I remember visiting a tech hub where a tiny team of innovators partnered with a global player to launch a niche product in under six months—it was chaotic but exhilarating, like watching a scrappy band pull off a sold-out show. Each partner plays to their strength, and the result is a focused solution that punches way above its weight. It’s a shift from competition to symbiosis, and I think it’s the only way to keep pace with today’s risks.
With historical data becoming less reliable, how are insurers leveraging synthetic datasets to tackle uninsurable markets, and what outcomes have you observed?
Historical data is like trying to drive forward while only looking in the rearview mirror—it just doesn’t work for today’s unprecedented risks. Synthetic datasets, which simulate potential scenarios based on algorithms rather than past events, are becoming a lifeline, especially in markets like the US where consistent losses have made entire regions uninsurable. Insurers start by feeding vast amounts of variables—think climate patterns, economic shifts, even social media trends—into AI models to generate thousands of ‘what-if’ outcomes. I’ve consulted on projects where carriers used these datasets to price flood risk in areas previously written off, resulting in coverage for communities that hadn’t seen a policy in a decade. One specific outcome was a 20% increase in market penetration for a mid-sized insurer who dared to step in where others retreated. There’s a quiet thrill in seeing a family get coverage again—it’s not just numbers, it’s lives. The challenge is trust; stakeholders need to feel these simulations aren’t just fancy guesswork, but grounded in rigor.
How can the industry move toward collective ownership of risk and reward, and what practical steps can carriers, brokers, and technologists take to build shared balance sheets?
Collective ownership is a mindset shift—it’s about recognizing that systemic risks are too big for any one player to tackle alone. Carriers, brokers, and technologists need to start by aligning on shared goals, creating balance sheets where risk and reward are distributed equitably. One practical framework I’ve advocated is a joint risk pool with transparent governance: each party commits capital or expertise, and payouts or profits are split based on contribution. I recall a pilot project I advised on where a carrier, a tech firm, and a broker co-funded a platform to underwrite emerging cyber risks; the initial tension over who ‘owned’ the IP was palpable, like a family argument over inheritance, but once we set clear terms, trust grew. Over two years, they mitigated losses by 18% through shared insights. The first step is dialogue—sitting down to map out who brings what and who bears what. From there, it’s about building contracts that incentivize long-term collaboration over short-term wins, fostering a sense of ‘we’re in this together’ that’s rare but powerful in this space.
What is your forecast for the future of systemic risk management in insurance over the next decade?
Looking ahead, I think systemic risk management will become the defining challenge and opportunity for insurance over the next ten years. We’ll see an acceleration of tech-driven solutions—think AI and synthetic data becoming standard tools—coupled with deeper cross-industry partnerships that blur the lines between insurers, governments, and even tech giants. The uninsurable will slowly shrink as alternative capital and shared-risk models mature, though not without growing pains like regulatory hurdles or public skepticism. I foresee a world where insurance isn’t just a payout mechanism but a proactive force for resilience, with ventures designed from the ground up to prevent crises rather than react to them. The air of possibility is exciting, but it hinges on whether we can shed transactional mindsets for truly collective action. What keeps me up at night—and also gets me out of bed—is whether we’ll move fast enough to match the pace of escalating risks.
