Global insurers and reinsurers are seeking new growth avenues in response to numerous challenges being driven by the accelerate pace of change across the sector, according to the Vice Chairman of reinsurance broker Guy Carpenter, David Priebe.
An abundant supply of capital from both traditional and alternative sources continues to hinder rate improvements across the re/insurance sector. At the same time, technology continues to advance and is advancing business models, while new and emerging risks create both challenges and opportunities for market participants.
“Despite these challenges, the outlook for the insurance market is one of increasing opportunity for companies that harness structural changes to create opportunities in new or existing markets. The availability of rich data sets and analytic solutions enables (re) insurers to carefully evaluate the myriad opportunities available and pursue a strategic approach to realizing their goals for growth.
“Solutions that lead to a successful growth strategy are propelled by a data-driven understanding of business dynamics and formulation of an execution plan across six critical areas,” said Priebe.
According to Priebe, four of the areas in question are sales and distribution, enterprise risk management / risk tolerance & capital strategy, catastrophe exposure management, and demographics and market opportunities.
Discussing sales and distribution, Priebe said: “Changing consumer expectations are catching up with the insurance industry and pressuring insurers to deliver a more engaging and interactive customer experience. The industry is gradually adapting to the changing market dynamics as some insurers pursue Internet sales and agency forces evolve and become better coordinated with carriers, for example.”
Regarding enterprise risk management / risk tolerance & capital strategy, Priebe noted how expansion into new markets is often a focus for companies seeking growth, and he explained that making the correct decision requires strategic analysis utilizing all available data.
“Analytic solutions for enterprise risk management are now allowing insurers to perform scenario testing to obtain an internal assessment of risk capital while also benchmarking against metrics,” said Priebe.
He continued to underline the importance of insurers managing their catastrophe exposure accumulation within regions within regions, highlighting how climate change is testing long-established models.
“Additionally, they must understand their catastrophe models and how exposure changes may impact losses. Solutions such as GC AdvantagePoint® tool help clients manage catastrophe accumulations,” said Priebe.
Entering new markets and regions is another way insurers and reinsurers look to expand, a trend that has increased in recent times.
“A deep understanding of the demographics of existing and potential customers achieved through data and analytics can provide insurers with insights in identifying markets that are primed for growth or decline.
“Risks such as drones and self-driving cars present challenges for (re)insurers, but for those with the right risk profiles and appetite for growth, there are opportunities. Innovations and analytics are leading to the development of new models that bring more certainty to these risks, creating opportunities for growth,” said Priebe.