Hannover Re’s Pickel sees cyber risks as biggest challenge for reinsurers; with climate change, nanotech and superbugs also on the radar
One of the reinsurance industry’s biggest areas of focus continues to be cyber risk, said Michael Pickel, chief executive officer of Hannover Re’s German subsidiary E+S Rückversicherung, and member of the executive board at Hannover Re.
“We are also watching a number of other issues such as climate change, nanotech and superbugs, just to name a few. For reinsurers it’s more important to keep their aggregate limits under control and make sure their underwriting is risk-adequate,” Pickel said.
At the Monte Carlo Rendez-Vous in September, Hannover Re’s chief executive officer Jean-Jacques Henchoz said the reinsurer had secured initial price increases across the board.
Offering an update on this position, Pickel told Baden-Baden Today: “We are now seeing a more positive momentum in the primary insurance market and that makes me optimistic. We could observe a more disciplined underwriting approach in the latest renewals on the reinsurance side.
“In combination with that, I would expect more improvements beyond loss-affected lines of business in the renewals to come.”
The reinsurer’s third quarter results are due to be published in November.
Pickel said: “In a still-challenging market environment we will continue to concentrate on our core competence as a traditional reinsurer and keep a very close eye on price and risk adequacy.
“Thanks to our low expense ratio and our longstanding relations with clients, we have a strong position in the market.”
He added that he was watching the latest press reports which show a high frequency of natural catastrophes again this year. Asked how nat cats are affecting business, Pickel said: “We can’t foresee everything and can’t price risks to perfection, but we need to make sure that we continue to learn from past events and adjust our assessment accordingly.
“Catastrophe models should be the base for, but never the only source of, input for decisions and pricing in our industry. People skills such as experience and market sense of our underwriters are key for risk adequate underwriting.”
Pickel added that he was surprised that the low interest rate environment “was not that much of a topic at Monte Carlo, even though it is definitely on everyone’s agenda”.
“This will especially have an impact on all segments of long tail business and will become visible in the balance sheets and reserves of property and casualty companies,” he concluded.
