Embrace change, but don’t forget what made you successful in the first place, says VIG Re
The re/insurance industry is too obsessed with embracing change and should remember what made it successful in the first place, according to Johannes Martin Hartmann, chairman of the board of directors at VIG Re.
“The industry needs technology and data analytics of course; it needs to embrace change,” said Hartmann. “But the experience we have earned over 40 years in this industry is still important. This is fundamentally a people business, and we cannot rely too much on models.
“We can’t rely on artificial intelligence to solve all the problems of the industry.”
He added: “Tradition is not a bad thing. There are good reasons we have been doing certain things for many years.”
For some of the key challenges the industry faces, such as cyber risk, the usefulness of models is hampered to some extent by the lack of historical data, which models need to work well, he noted.
Hartmann said VIG Re has had to be selective in the technology it invests in. “We are not Munich Re or Swiss Re, we can’t invest $1 billion in an IT project that may or may not pay off many years from now,” he said.
Instead, the Czech re/insurer has limited its technology investment to three key strategic areas: the B3i blockchain initiative, cyber, and data analytics.
Hartmann admitted there is a lot of hype around blockchain, but said he believed it has the potential to revolutionise the re/insurance industry on the administrative side, dramatically improving claims and accounting processes.
He hopes to see a relatively quick return on his investment in the other two areas, but blockchain technology might take longer to pay off, he said.
He welcomed the fact that B3i is a group initiative, noting that if a single institution controlled this platform it might give them excessive power.
“The industry does need to embrace greater standardisation,” he said. “The blockchain can be a model for that. We just need it to achieve critical mass.”
Hartmann said the key metric that tells reinsurers how they are doing is not premium growth, but reputation, which he said could be measured by talking to competitors, as well as clients.
“Competitors will always tell you honestly if you are doing something wrong. If two of them tell you the same thing you know it is a problem,” he concluded.
