Munich Re sees key role in re/insurance industry transformation, says Pohlchristoph

The re/insurance industry needs to “collaborate closely with the public sector” to close the insurance protection gap in Asia Pacific, according to Hermann Pohlchristoph, a member of Munich Re’s management board.

This was one of the main challenges he highlighted as the industry met in Singapore for the 16th Singapore International Reinsurance Conference last week.

Pohlchristoph also flagged the issue of how re/insurers can shape the workforce and careers of the future as another important challenge, adding that “attracting a new breed of talent in the form of data-savvy, tech-proficient, creative people to help drive digital transformation” would be part of the answer. And, emphasising the issue that was front and centre at SIRC 2019, he said that, how the industry decides to work across sectors and countries to measure, manage and mitigate the risk of climate change was a third crucial challenge.

“Our challenges are shared across the industry,” he said. “At Munich Re, more than anything we see these challenges as opportunities. Our diverse footprint and businesses mean that we can cultivate many new ideas, innovations and kinds of expertise from across our group to redefine how we can better support our clients and play a part in transforming the insurance industry.”

Munich Re had a successful year in 2018, he said, adding that the reinsurer is “strategically and financially on track”.

“In our recent ad hoc announcement to the market [in October 2019], we expect to beat our [full year profit] target of €2.5 billion for 2019, despite typically considerable uncertainties about developments in major losses and the capital markets during the rest of the year.

“The strong result we have achieved in Q3, which will be published on November 7, is due to good operational performance, strong currency gains, and a very good investment result.”

He said that on the back of this global view, the business is also seeing good development in its performance in Asia Pacific, where Munich Re continues to grow profitably, against a backdrop of challenging reinsurance rates both at a global and regional level.

“Natural catastrophes in Asia - especially the recent super typhoons in Japan - have had a devastating effect on lives and infrastructure and have impacted the insurance industry with heavy losses. These events, however, do not change Munich Re’s commitment to Japan, and the broader region. Our risk appetite is unchanged, and we want to continue to support and deepen our long- term relationships with our clients; and we have the capacity to do so.

“We are here to work with our clients who are increasingly looking to leverage reinsurance structures and capabilities to support capital optimisation, particularly during periods where there is a high frequency of losses.”

Looking to the future, Pohlchristoph said that the reinsurer was in a strong position to continue expanding in Asia.

Over the past two years the reinsurer has enhanced the foundation of its long-standing non-life reinsurance presence in the region, he explained. “From the organisation’s perspective, we strengthened our regional footprint through our regional centre in Singapore to ensure greater proximity and access to expertise for our clients. We also established a composite branch presence in key markets India and Japan.

“We employ more than 1,000 people who reflect the diversity of our client base in 14 markets of the region, with skills in underwriting, claims, risk modelling, data analytics, IT and insurance consulting and we have made substantial investments in complementing our core capabilities with new service offerings such as data analytics, consulting, cyber risk management and our overall digitalisation agenda. We have also expanded our capabilities in agricultural risk management in India and China.

“Our ambition is to continue on this journey of enhancing our specialist solutions to meet evolving client needs and risks, and to grow the business.”

Technology is another area where the German-based global reinsurer sees an opportunity to leverage the digital revolution taking place. He told Intelligent Insurer that the business is working with clients to navigate the changing world of risk and find opportunities to grow in this space. This could mean introducing clients to new technologies or start-ups as potential strategic partner, or it may mean co-developing new products with clients to meet an emerging need.

He added: “Asia Pacific markets are characterised by growing affluence and customers who are accustomed to mobile-first digital experiences and as a result, they are of course very open to exploring and adopting new ways of working and solutions.

“This is where we see a lot of potential for our capabilities in data analytics, cyber risk management, the internet of things (IoT) as well as consulting, where we can help clients take an integrated strategic approach to address their business needs, beyond just providing them with capacity.”

IoT is a particular focus for the future, he said, explaining: “One technology trend that we pay a lot of attention to is Industrial IoT, which is the integration of intelligent and connected systems in industrial processes, resulting in, for example, smart factories using built-in sensors.

“We also see that IoT is likely to significantly increase the demand for cyber security and insurance and this an area that we are very much focused on - we have a global pool of experts and a regional team covering our Asia Pacific markets that connects clients to tailored services that extend from risk assessment, underwriting and claims management to service recovery, IT forensics and other specialist capabilities like legal and reputational support.”

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