Zurich reduces reinsurance partners
Zurich is placing an increased emphasis on fine-tuning its reinsurance-buying process in order to achieve the best value, Markus Meier, Zurich’s head of insurance management, told Baden Baden Today.
“We endeavour to create more efficiency in what we’re doing,” he said. “At the same time it’s important that we really strive for a partnership with those companies that have been on our panel for years.”
As part of this process, Meier said, the insurer has started to reduce the number of players on its reinsurance programme in order to achieve greater efficiency and simplicity.
“If you have fewer reinsurance partners, you have fewer statements of accounts, so the administrative part can get leaner,” he said.
He added that Zurich is not an opportunistic buyer. While some brokers and reinsurance companies suggest ceding companies should buy more reinsurance in order to offload some of the volatility on their balance sheets, Zurich’s philosophy is that if you have business that is losing money, you cannot make it profitable through reinsurance.
“That’s why the original underwriting—the gross underwriting—is key. If you get that right, then you get a decent margin and you can retain it, within a certain risk appetite.
“Reinsurance is a long-term play; that’s why we are not opportunistically taking advantage of the situation,” Meier said.
Speaking of Zurich’s own internal reinsurance function, he added that the main target is to support the company in achieving efficiency on the capital management side.
“Because we act as if we were a third party external reinsurer, our job is to understand the data much better going forward and to be ready to face challenges in the reinsurance industry as a whole,” he said.
He added that it will be vital to stay alert to new developments within the industry. These could potentially include new distribution channels if companies such as Google decide to start selling policies, and changes to the type of cover required for long-standing lines such as motor, which may be set to shift away from driver liability towards product liability with the predicted advent of driverless cars.
