24 October 2017 Insurance

Baden-Baden Survey - In association with Swiss Re

In association with Swiss Re, Baden-Baden Today conducted surveys of senior industry executives ahead of and during the conference. Their responses to various questions are published in this newsletter.

What are the underlying reasons for protection gaps globally and how can the industry tackle them?

Protection gaps have two causes: product design (including price) and market structure. Aon believes the problem underlying both is a ‘capital efficiency gap’; across society we are failing to use a total cost of risk approach to identify the best instruments that can reduce economic losses. Risk education, more sophisticated data and analytics, combined with access to a wider range of solutions and capital sources, are key to solving this challenge.
Paul Mang, global CEO of analytics, Aon

A lack of awareness that for countries to be resilient, their governance has to have re/insurance solutions to ensure post-shock financing. The re/insurance industry has to be more vocal in communicating the societal safety net that insurance provides. Collaboration is key. Governments must partner with the re/insurance community and bodies such as the World Bank. The industry has to work to help increase insurance penetration globally with non-market forces—one company cannot do it alone.
Brendan Plessis, head of emerging markets, XL Catlin

One of the primary reasons is a lack of understanding around the value of insurance. There is often frustration and uncertainty among potential buyers regarding how a policy will respond. For example, there may be various exclusions depending on whether a loss is judged to be caused by wind or flood. The property owner doesn’t care about causality; they just want certainty that their insurance will cover them. Developing more customer-focused insurance products with seamless cover would help close the protection gap.
Andy Caldwell, deputy active underwriter Syndicate 1955, Barbican Insurance Group

What challenges and opportunities result from technological advances?

The opportunities are almost endless. Better data analytics allows better risk management, prevention and coverage. It also increases the accessibility of insurance and can be used to make insurance more relevant—accessing those with the greatest need for cover.

Bespoke products can identify some members of society as economically uninsurable, leading to social and ethical questions. Flood Re in the UK was a response to such an issue.
Jonathan Howe, global insurtech leader, PwC

The availability of clean data is the key issue for re/insurers, as there is a lack of standards for the data entry of risk names, coverage definition and limit capture. Furthermore, data isn’t properly integrated across lines of business and underwriting centres, leaving data trapped in silos. Once data can be truly integrated then the opportunity for the business to analyse across lines of business and underwriting centres exists with confidence.
Suki Basi, CEO, Russell Group

The industry has always innovated, but now technological changes require faster rates of innovation and change. Large incumbent carriers, reinsurers, and brokers possess insights, data, and talent that together can produce greater value-added to their customers. Still, to produce the value-added they need to stir in greater technological orientation among all employees, and among their business partners, and place a greater value on speed and pace of execution. We are all technologists now. Are you moving fast enough?
Mike Pritula, president, RMS

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Other stories from the Baden-Baden Day Two newsletter

Hannover Re prepares to grow its book as nat cat losses drive rates upwards

Hiscox Re to increase capacity on back of balanced book

Munich Re seeks US growth as rates rise on back of nat cats

Volatility in Spanish bond market will hit re/insurers

Alternative thinking: the historic rise of ILS

Empowering reinsurance buyers on capital optimisation

The changing face of terrorism risk

Expert support for catastrophe and exposure management

Certain lines must push back on rates

Rates to return to risk-adequate levels

Incumbents must absorb disruptive forces

US may look to replicate UK’s Flood Re programme

Robotics & AI can transform business

Insurers must learn to sell themselves better

Recent losses ‘first big test’ for alt capital

US rate increases to spread to Europe

Cost per natural disaster falls

Insurtech’s effects become clearer

Rate increases will be biggest talking point

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