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Data is key to unlocking uninsurable risks: Swiss Re’s Mumenthaler

25th August 2021 - Author: Matt Sheehan

Christian Mumenthaler, Chief Executive Officer (CEO) at Swiss Re, has argued that data and digitalisation will be key levers for re/insurers to tackle ‘uninsurable’ risks and reduce the global protection gap.

christian-mumenthalerWriting as part of a recent blog post, the Swiss Re executive noted that the pandemic has exacerbated the growing gap between economic and insured losses, which poses serious issues for societal resilience particularly in emerging and developing countries.

“In essence, I see big data as the fertile ground to create new markets and to diversify risks that up to now were considered uninsurable,” Mumenthaler remarked. “I think it’s no surprise that data is sometimes referred to as the new gold.”

Not only can digitalisation open up a new spectrum of risks for re/insurers to cover, he proposed, it can also help people and businesses overcome barriers to buying insurance, including affordability, ease of access, and the attractiveness of the product.

Another major barrier is high transaction costs, with roughly one third of insurance premiums still going towards the costs of distribution, administration and claims settlement.

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“The digitalisation of the value chain will eliminate many inefficiencies in the insurance market,” Mumenthaler noted.

“Faster and real-time assessment of policyholder’s risks, taking out policies online and automated claims settlement drastically reduce the costs of insurance. Artificial intelligence and machine learning are bound to further accelerate processes. Affordability and effortless customer journeys pave the way to higher insurance penetration in the future.”

Especially in developing countries, insurance distribution via mobile is considered to be a game changer for accessibility, for instance by allowing farmers without internet access to insure their crops via mobile phone.

“The ongoing technology-based shift of re/insurers from “detect and repair” to “predict and prevent” will bring great progress in dealing with risks before an event. The new approaches to prevention must not forget risks that are considered uninsurable. Of course, helping to mitigate an uninsurable risk is worth at least as much to the industry as covering it financially,” Mumenthaler concluded.

“Through smarter use of data, we see the risk landscape evolving rapidly, creating opportunities and new ways to help society benefit from risk knowledge. However, we must accept that digitalization cannot overcome all currently uninsurable risks, but with it we can take an important step towards societal resilience and reducing the protection gap.”

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