Reinsurers must learn to collaborate or face irrelevance, warns RMS CEO
The reinsurance industry has more to gain by working together than constantly competing, according to speakers at the Guy Carpenter Reinsurance Symposium, which kicked off the Reinsurance Meeting at Baden-Baden.
Karen White, chief executive officer at RMS, warned delegates attending the symposium that the industry is on the cusp of a phase of great transformation. Reinsurers must work together if they are going to stay relevant, she said.
White said: “There are moments when the industry and the market change so rapidly that it forces companies to change. At these moments, the pain of staying the same is greater than the pain of change.”
White warned that history has been ruthlessly unkind to incumbents who don’t embrace change.
“Reinsurers can still have their proprietary data, they can still have their secret sauce,” she said. But they must embrace a future-proof data standard, increasing data interoperability, which will bring data out of silos and help reduce costs, she added.
Ian Branagan, group chief risk officer at RenaissanceRe, agreed. “Increasing industry collaboration is vital to ensuring data flows through the industry more efficiently, allowing reinsurers to get ahead of change in the consumer risk landscape,” he said.
Branagan suggested that the formation of an industry body dedicated to harmonising data standards might help the industry move forward.
He warned that reinsurers will maintain their value proposition over the medium term only if they improve their ability to collaborate in key areas such as data standards and modelling technology. Competition in these areas used to be healthy and create value, he said, but in many instances that is no longer the case.
White highlighted the key risks the reinsurance industry needs to understand and build products to help society manage: climate change, cyber, new technology, and social media.
Reinsurers need to help societies manage population growth in high-risk areas, such as on coasts and along tectonic fault lines, she said.
Older risks that had been thought to have receded are now re-emerging, she added, citing the growth of the antivaccination movement, which has given old diseases a new lease of life.
