Governments and insurers need to work much more closely together to address growing climate and cybersecurity risks. But today, the sense of urgency is lacking, believes Philippe Lallemand, the boss of the insurance company Ethias.
“A few years ago, Ethias was still considered the ugly duckling in the insurance sector. Now, we are a local champion,” says CEO Philippe Lallemand without false modesty.
“It turned out to be judicious that the public authorities entered our capital.”
“When we decided, five years ago, to support more local initiatives, we were quickly decked out in the image of care bears”, he tells us in his office at the new Brussels headquarters of Ethias, overlooking eight floors the Little Belt. “But, with all the events of the last few months, everyone now understands the importance of having local players in our country capable of playing a role in financial services, energy or the raw materials sector. In this respect, it proved to be judicious that the public authorities entered our capital. Since then, we have earned their trust.”
The fact that the company – in whose shareholding we find the Federal State, Wallonia and Flanders – has again been distributing a dividend for two years has undoubtedly also helped to strengthen ties. Friday morning, Ethias thus announced that it would pay a dividend of 105 million euros for its past financial yearan amount close to that distributed a year earlier while the net profit recorded in 2021 fell by almost 10% to 190 million.
Compensation higher than the legal prescription
“Admittedly, this result is slightly lower than the budgeted objective, but this difference is explained by the compensations relating to the floods of last July: we have paid twice the amount normally provided by law.” The legal provisions stipulate, in fact, that the Regions bear financially all the damage resulting from natural disasters which exceed a ceiling of 320 million euros. given the huge impact of last summer’s floods, Belgian insurers and the Walloon Region have agreed that the former will intervene up to double this ceiling. The companies also granted an interest-free loan to Wallonia to enable it to cover the rest of the compensation.
Since then, Belgian insurers have been urging the public authorities to developing a new legal frameworkbetter able to cope with natural disasters induced by climate change.
“It is very unlikely that disasters such as we experienced last summer will not happen again in the future.”
“It is very unlikely that disasters such as we experienced last summer will not happen again in the future”, underlines Philippe Lallemand. “If a tidal wave hits our coast, the damage will be even greater than that observed in Wallonia.. During the last disaster, the insurers agreed to bear a higher burden than that provided for by law. But will they accept it again next time?”
Create a public reinsurer
The constitution of a public reinsurer could be a solutionbelieves Philippe Lallemand. “In France, there has been one since 1948: the Caisse Centrale de Réassurance, one of the main reinsurers in the world, which operates with the guarantees of the public authorities. Why could we not create one in Belgium? to cover us against the many risks that threaten us? The funds are there. Insurers will take their responsibilities. And, in the event of new disasters, the public authorities will have to intervene anyway. We are therefore committed to finding a solution as soon as possible..”
Cybercrime too little taken into account
Climate change is no longer the only new threat that insurers must now take into account, adds the boss of Ethias. “Cybercrime is actually the biggest risk. Ethias only insures cyber risks for local administrations. We do not cover companies or individuals for this type of risk.
“Insurers intend to continue to cover these risks, but reinsurers no longer want to intervene.”
But recently we have seen several attacks targeting, for example, hospitals or public institutions. And this trend is set to grow in the future. For the moment, this problem remains without real solution. Insurers intend to continue to cover these risks, but reinsurers no longer want to intervene. And public authorities also act too little on their side. I have yet to see any court convicting these cybercriminals.
We need to discuss all these points further with the authorities. In reality, we need a Minister of Prevention who would be responsible for raising awareness about this type of event and developing measures to limit these future risks. This would reduce the impact of shocks and, at the same time, increase people’s trust in society as a whole.”
Key figures for the 2021 financial year of Ethias
Net profit : 190 million euros
Non-Life operating profit : 200 million euros
Life business operating profit : 72 million euros
Collection : 2.78 billion euros (+ nearly 2%)
Solvency ratio : 178%
Dividends : 105 million euros will be proposed to the general meeting
90% of victims summer floods were compensated
The key phrases
- “Everyone now understands the importance of having in our country of local actors capable of playing a role in the financial services and energy.”
- “In the last catastrophe, the insurers have agreed to bear a charge higher than that provided for by law. But will they accept it again next time?”
- “In reality, it’s cybercrime which is the main new risk.”