Parametrics to close protection gap: Hannover Re
Hannover Re has been active with parametric coverage in the agricultural field for many years, and it is now focusing on the coverage in its property segments.
Speaking to FIDES Today, Daniel Duesterhaus, general manager P&C Latin America, Caribbean and Iberian Peninsula at Hannover Re, says that the reinsurer is looking to emphasise parametric covers further in emerging markets such as Latin America.
He says: “This product has a lot of growth potential, because it can fill many gaps that traditional products have not yet been able to address, such as smaller-scale covers in remote areas.”
Parametric re/insurance doesn’t rely on assessments of the actual damage caused by disasters but rather uses predefined triggers and payout mechanisms, where the payment for a claim is fixed in advance.
This type of coverage, says Duesterhaus, can help provide insurance to countries or regions that have difficulty obtaining cover.
“Especially in poorer countries, a higher share of natural catastrophe losses are underinsured or even not insured, and that is where we as a global reinsurer and active lead reinsurer in Latin America are willing to promote parametric concepts.
“We see it as our corporate social responsibility to help limit the impact of natural disasters,” he adds.
Hannover Re is also seeking to bridge the space between insurers and insurtech.
In February, the reinsurer launched an innovation platform, called hr | equarium, which aims to connect insurance clients with insurtech partners on a worldwide level.
“In a growing insurtech universe with innovative solutions and services that span the entire insurance value chain, it is challenging for insurers and insurtechs to find the right partners to work with,” says Duesterhaus.
The platform intends to facilitate connections with innovative insurtech partners, making it easier for the insurance industry to find and implement new technology.
He believes this offering, which has already exceeded expectations with several hundred clients registered, can help accelerate the process of bridging the gap.
Duesterhaus adds: “With close to 100 solutions on the platform and new additions coming in weekly we are on a good road towards bridging the gap.”
Playing the long game
“Our main message is that we will continue to support the Latin American continent with our presence, analytical know-how and service,” he notes, before adding that, as a committed long-term player in Latin America, Hannover Re doesn’t take ad hoc changes in its underwriting appetite and capacity.
Hannover Re has been a player in the Latin American region for the past 40 years, Duesterhaus says. “We continue to focus on the individual needs of our clients with tailor-made solutions, as in our view reinsurance is not a commodity-type product.”
It’s important to note that the reinsurer will continue to emphasise the need for adequate underlying primary rate and reinsurance terms and conditions.
“Certain countries in Latin America that are exposed to natural catastrophes need to push further for rate increases, as the primary rate levels can be challenging,” the Hannover Re executive says.
In terms of consolidation, the reinsurer expects mergers and acquisition activity to continue, reflecting the need for economies of scale, automation and digitisation.
Medium and large-sized insurers will be better able to cope with this development, according to Duesterhaus.
“In the past years we have seen important groups such as Suramericana and Fairfax expand their footprints in a very significant manner. Hannover Re is pleased to accompany them, and our other clients, on this journey.”
Other developments in the region include the EU-Mercosur deal, which was signed earlier this year after two decades of negotiations between the European Union and the Latin American Mercosur countries (Argentina, Brazil, Paraguay, and Uruguay).
Hannover Re welcomes the deal, adding: “This will have a very positive impact on continued growth on both sides of the Atlantic.”
