Innovation is now critical: Munich Re

In the eyes of Munich Re, the company’s story is one of discipline, resilience and innovation in a highly competitive and sophisticated market. In today’s market, its executives say these values are more important than ever.

“We are strong but we want to become stronger in insurance product development. We want to respond to the new technological trends and social trends in society,” said Torsten Jeworrek, a member of the board of management at Munich Re, speaking in Monte Carlo.

He added that strict underwriting and diversification are more important than ever, combined with cross platform collaboration.

Jeworrek said: “The direct impact of alternative capital on the industry has not changed, and it is particularly visible in the cat segment.

“More and more alternative capital providers are not finding the right investment opportunities and so they look for alternatives. They are beginning to invest more in cat.”

He stated that while some of Munich Re’s peers will lose their discipline in the pursuit of market share, Munich Re will not follow irrational market competition.

“As long as the market is soft, we don’t compete in an aggressive way for the commodity business. But we are prepared to give volume if necessary,” he said.

“There have been some attempts, particularly in Bermuda, to expand business models into other segments of business. Most of these failed but we are seeing spill-over effects. Because of lower margins, there is an attempt to diversify or move capacity into other lines of business.”

By way of an example of its innovation Munich Re notes its involvement in the development of inland low hazard flood reinsurance. In the early stages of incubation, this form of reinsurance is expected to cover a gap in the market.

Thomas Blunck, president and chief executive officer of Munich Reinsurance America, said: “New products are complex to develop, but they allow us to grow in this space with very little competition. These areas also tend to have higher margins and they are definitely a differentiator from our competitors. This is why innovation is key to our operations.”