Better risk knowledge can widen Asia-Pacific protection: Axa XL’s Guidée

Axa XL’s Renaud Guidée explains why granular portfolio data and clear placement structures are essential for underwriting Asia-Pacific’s expanding infrastructure and shifting climate risks.

Key points:
Granular data improves reinsurance access
Changing exposures demand better modelling
Financial security matters at claim time

Better knowledge of the underlying risk can help widen insurance and reinsurance protection across Asia-Pacific as rapidly expanding infrastructure and changing climate exposures reshape portfolios, according to Axa XL Reinsurance chief executive Renaud Guidée.

For cedants, that starts with giving reinsurers a much clearer view of what sits inside their books.

Historically, insurers in Asia-Pacific could distinguish themselves through detailed property exposure data and greater visibility over indirect US casualty exposures. Guidée believes that many reinsurers are increasingly seeking this level of disclosure.

“We see data transparency and granularity becoming much more mainstream,” Guidée told SIRC Today. “There is a broader realisation across the market that, to secure the best cover and terms, you have to know your books and be willing to open them up to your business partners so they can properly assess the risks within them.”

“That is real progress and reflects a much greater level of maturity and sophistication across the industry,” he added.

He sees that shift as evidence of a more sophisticated market. 

It is also becoming increasingly important as the region’s risk profile changes. Alongside traditional natural catastrophe exposures, investment in data centres, energy grids and associated infrastructure is creating new concentrations and insurance needs.

“Asia-Pacific is at the forefront of the AI industrial revolution,” Guidée said, pointing to the scale of investment and innovation taking place across the region.

Greater transparency around those exposures can also help narrow protection gaps. “It’s definitely through better knowledge of the underlying risk, especially through the sharing of risk exposure information, that we will together progress towards a greater penetration of reinsurance within Asia-Pacific,” he said.

Changing exposures

Deeper risk knowledge is equally important as natural catastrophe exposures evolve. 

Flood stands out particularly in Asia-Pacific. Changing weather patterns are altering the hazard itself, while urbanisation, rising insured values and greater concentrations of people and assets in coastal areas are increasing the exposure.

Those changes make historical experience alone a less reliable guide to future losses and put greater emphasis on scientific research, modelling and exposure data.

Axa XL combines in-house research with academic partnerships, including work with the Cambridge Centre for Risk Studies, to strengthen its understanding of emerging and evolving perils.

“We invest a lot in both science and talent,” Guidée said, highlighting the recent work on wildfire, including research Axa XL made publicly available as part of an effort to broaden understanding of the peril beyond its own underwriting teams.

“We see data transparency and granularity becoming much more mainstream.” 

Quality of capacity

Competition across Asia-Pacific is intense, but Guidée views that as a sign of the region’s attractiveness and an incentive for reinsurers to keep improving their proposition.

For Axa XL, that extends beyond underwriting capacity to technical expertise, operational consistency and an understanding of the cedant’s wider strategy.

Claims handling is another part of that proposition. Guidée said keeping claims management in-house gives the reinsurer direct “skin in the game” and helps maintain alignment when losses occur.

But he also argues that buyers should pay close attention to the financial security behind the capacity being offered.

“Not all capacity provided on the market is alike in terms of financial security associated with it,” he said.

That distinction may not become apparent at placement. Reinsurance commitments can be tested years later by a large or complex loss, making the long-term strength of the provider an important part of the purchasing decision.

Guidée said buyers ultimately need counterparties “who live up to their commitments, people who deliver on their promises and people who have not only the willingness but also the ability to do so from a balance sheet and capital strength perspective”.

For Axa XL, he said, that combines underwriting and claims expertise with a “fortress” balance sheet and strong credit quality.

As Asia-Pacific’s exposures become larger and more complex, Guidée says the market will need enough information to understand the risk properly, as well as capacity strong enough to stand behind it when losses arrive.

Renaud Guidée is chief executive officer of Axa XL Reinsurance. 

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