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“Disruption doesn’t bring opportunities, we have to earn them” – James Nash

23rd October 2017 - Author: Staff Writer

“I believe there is substantial value creation potential in the future,” said Guy Carpenter’s James Nash, at the Baden-Baden Reinsurance Symposium, “however, disruption does not automatically bring opportunities, we have to earn them.

“We won’t be able to capture this potential without transforming our industry and without extending our business models, for example, into risk prevention and risk mitigation.”

Transformation is key for capturing the opportunities present in the industry’s current state of disruption, according to Nash, who highlighted the shift in capital structure and the pace and diversity of change as two focus points that have fundamentally altered the overall market dynamic.

The capital structure of the industry has changed with the growth of reinsurance and alternative capital segments, and following recent major losses, the new structure is being tested as the industry waits to see whether the financial markets can deploy capital quickly post event.

He said; “If the theory plays out in practice, those participants waiting for the market to react with rationing and significantly higher prices will no longer be ensured survival. For them to survive, they need to find new and better ways of doing business.”

On every level, the 4rth Industrial Revolution is “disrupting the established order,” Nash said, the future lies in an industry that’s primarily driven by data analytics and technology, however, to fully capitalise on the potential these drivers create, re/insurance must transform.

As part of this transformation, Dr. Joachim Wenning, Chairman of the Munich Re Board of Management, said the reinsurer is working to remain a forerunner in offering innovative, digital solutions to its clients; “to manage disruption effectively and to grasp the opportunities it creates, we must look to identify, evaluate and package risk in a more intelligent manner.”

In this ever-changing environment, Wenning pointed to two facts that will remain constant; “first, people and organisations will always want to protect their assets by laying off risk to others.

“Second, there will always be those with the capital willing to assume that risk. In between and around these poles everything is subject to change.”

Adrian Jones, Head of Strategy & Development, SCOR Global P&C, told delegates that they themselves would drive disruption by grabbing hold of the innovative capabilities at their disposal.

He said; “for insurers and reinsurers, the most likely disruptor is either you yourself or a competitor you’ve always known about.

“Insurers can disrupt themselves by reinventing the customer experience. Reinsurers have to adapt to handle rising global aggregations of risk, which will require large-scale expertise across lines of business and geographies, all for the benefit of clients and brokers.”

Luca Albertini, Chief Executive Officer and Founding Partner, Leadenhall Capital Partners, said the disruptive impact of capital flow within the insurance industry, works as “agents for change”.

“The recent catastrophe events have demonstrated that ILS investors are in this space in a mature way and are here to stay; but not at any price. Investors need to see an acceptable long-term return for their investments, accepting losses, but seeking payback as well.”

At a time when re/insurers are tasked with managing fundamental disruptors within the industry as well as keeping up with disruptions facing clients and new and emerging risks – using insurtech and new insights gained to benefit the client base and offer enterprises and individuals a more comprehensive understanding of their fast-changing risks were key themes highlighted by re/insurance executives.

While the industry works to keep abreast of fast-paced change, the fundamentals of strengthening and building on the client experience remain unchanged – offering all parties stability in partnerships throughout the innovation era.

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