As Munich Re invests in digital transformation, Chairman of Munich Re’s Board of Management Joachim Wenning said in his letter to shareholders, the strategy is not to imitate business models of data and internet companies but to enhance core business and push back boundaries by adding digital elements.
The reinsurance giant is working to sustain its earnings power in the long-term through a series of investments in digitisation while cutting costs and setting targeted impulses for profitable growth.
Munich Re is working to build digital competence and reduce complexity to streamline internal processes, Wenning said: “We have set up dedicated units to capture, structure, and analyse data, and we make these findings available to our business units.
“We are developing new digital business models – such as for the Internet of Things.”
The reinsurer is expanding its innovation workforce, Munich Re’s current figures of over 200 data specialists and 300 that staff work in innovation are set to rise.
“More and more of our experts are spending most or all of their time coming up with innovative solutions to meet existing and new requirements in their area of expertise,” said Wenning.
Meanwhile, in other areas, the reinsurance giant is reducing costs and lowering its headcount.
Munich Re has invested heavily in digitalisation at subsidiary and primary insurance arm ERGO, and runs its own start-up digital insurer, nexible.
ERGO’s profit of €273 million surpassed guidance for 2017, however, Wenning said “we still have a lot of hard work to do until the Strategy Programme is successfully completed. Our aim is still for ERGO to contribute at least €600 million to the consolidated result for the year as from 2021, and lay the strategic foundations for a successful future.”
Last year Munich Re’s digitisation efforts as announced in its 2017 Annual Report included investments in big data analytics and application such as its U.S. subsidiary Hartford Steam Boiler (HSB), which uses sensor technology to develop innovative insurance solutions for the Internet of Things together with industrial clients.
The reinsurer had also stated it would utilise the growing digital opportunities to further reduce and cover health risks, moving away from pure cost coverage for illness and towards health maintenance and prevention.
Munich Re said in its presentation on Transformation Programme in the Reinsurance Group, Reshuffling the Value Chain, its focus is on expanding the boundaries of insurability through increasing cyber, data-driven and digitally augmented underwriting/claims solutions, after gross written premiums for cyber in 2017 grew to $354 million.
Last year the reinsurer invested EUR60 million into less than ten assets in the InsurTech, IoT, and data specialist realm.
