Re/insurance to grow in importance in the future, SIRC 2019 panel confirms

Gross domestic product growth is outstripping insurance growth, the protection gap is widening and insurance coverage is not keeping pace with rising risks, but there are reasons to be optimistic about the future importance of re/insurance, according to panellists in the “Reshuffling the Industry” panel discussion at the Singapore International Reinsurance Conference yesterday.

“The insurance market will continue to grow and will be more important,” said Jérôme Jean Haegeli, group chief economist at Swiss Re.

“The question is, can it be more important than today? Yes it can, and it should be.
“More and more you see policymakers realising that insurance companies are underwriting risks and at the same time we are investing risk capital we have deep pockets and a long-term investment horizon.

“Policymakers and all of us have a shared interest,” Haegeli said.

James Nash, chief executive officer, International at Guy Carpenter, added that when he entered the industry 34 years ago it was focused on the protection of tangible assets, but it has shifted to having a substantial focus on intangible risks.

“We started as an industry to evolve business interruption products, we started on cyber risk,” Nash said.

“There is much more we need to do. People talk about the protection gap, but actually the great opportunity for the insurance companies is the insurance gap: meeting the demands of the chief financial officers (CFOs) of corporations.

“There is a huge opportunity ahead for insurance companies, but it’s not only protection there are going to be services that provide prevention as well.”

Selling services
Claudia Salem, chief executive officer, property & casualty Asia-Pacific at Allianz SE, agreed, saying the industry is moving from selling products to selling solutions and services.

“This is why the CFOs come to us. In this day and age we, as insurers and reinsurers, are thinking about the macro changes, and then partnering through an ecosystem to create better risk management and risk prevention,” Salem said.

“We don’t want to be there just to protect you when the worst happens; we want to help you prevent the worst things happening.”

Asked why people would not simply go to other sources such as providers of safety systems or cyber technology for this kind of support, she said that the best solution is a combination of insurance and technical solutions.

“Technology alone will not cut it,” Salem said.

“It’s a combination of the art and the science, and insurers and reinsurers who have been around for years understand the fundamentals of risk management and risk assessment. “That is still a skill that comes to them; it marries with the technology and the data and the analytics and evolves that way.”

Discussing the possibility that reinsurers and insurers are converging, Haegeli said that his view was more nuanced, taking into account the rising role of technology.
“The insurance and reinsurance world the whole ecosystem, no question is changing,” he said.

“It’s changing because of technology, and maybe the lines between insurance and reinsurance are blurring, but I don’t see insurance companies becoming big-time reinsurance players, nor the other way around.

“I think we will have an ecosystem with more maybe diversified players.”

Talal Al Zain, group chief executive officer at Trust Re, agreed on the importance of technology, saying that Trust Re has been leading a transformation to digitisation, e-accounting and handling claims using technology.

“For us it was a strategy to become more efficient and less expensive for clients,” he explained.

Nash added that while the separation between insurers and reinsurers remains valid, that may change.

“When I look to the future, I see more collaboration and different access to markets with regard to new products.

“Reinsurers still have a huge role to play, but it will be different depending on the products in the future,” he said.