At a symposium hosted by reinsurance brokerage Guy Carpenter at this year’s Baden-Baden conference, senior re/insurance figures provided a range of insights into the industry’s readiness to adapt and harness the benefits inherent to the tech-driven Industry 4.0.
With the needs of clients in constant flux and business efficiency and interconnectedness evolving faster than ever before, the panel first reflected on whether the sector was fully embracing this technology revolution.
Guy Carpenter Chief Executive Officer James Nash noted that new tech is already “transforming radically” the characteristics of risks assumed by the industry, while simultaneously generating huge market opportunities.
“The quantity and quality of data associated with Industry 4.0 should enable more precise underwriting,” said Nash.
“This brings huge opportunities to grow and innovate, as well as enhance risk understanding and increase efficiencies. To exploit these opportunities fully, we need to offer comprehensive solutions that mitigate these new risks and create effective underwriting and distribution systems.”
Nash went on to explain how Industry 4.0 puts societies and economies on the cusp of one of the ”most significant periods of change”, and that major players must work with capital providers to help understand how risks are likely to evolve so they have confidence in deploying their capital at acceptable risk parameters.
Commenting on the supply chain within this context, RenaissanceRe’s senior vice president and group Chief Risk Officer Ian Branagan sees huge potential in the efficiencies offered by new tech.
“The supply chain in our industry continues to be impeded by legacy inefficiencies, costs, duplication and poor integration,” he told delegates.
“There is great potential for positive change if we look at the supply chain in a holistic manner and as an integrated system; harnessing technology to support simplification, less duplication, automation, cost-efficiency, and more streamlined distribution networks.
“At RenaissanceRe, we believe our industry has an opportunity to enhance our collective value proposition to society by working together and leveraging digitalization, data and underwriting expertise to meet the constantly evolving risk landscape and nature of consumer demand.”
RMS CEO Keren White reflected on the importance of tech-driven innovation in successfully adapting and meeting the demands of the evolving risk life cycle, as well as in enhancing overall value to customers.
“We’re at a pivotal moment,” she said. “The dynamics of the risk market and our industry demand that we change and adapt while at the same time, technology has evolved so that it can be harnessed in new ways to drive change effectively.
“Fundamentally, tech-driven innovation is a key pillar to better manage the evolving risk life cycle and deliver greater value to customers, as we are hit with the impact of extreme weather, climate change, man-made disasters, a shift in value from tangible to intangible assets, emerging risks such as cyber, along with liability and litigation trends, to name a few.”
White noted how these kinds of market disruptions create new opportunities and open the door to new business models. The other side of that coin, she added, is that industry disruptions are often ruthlessly unkind to incumbents who don’t embrace change.
Lloyd’s director of performance management, Jon Hancock, considered both the challenges and opportunities that Industry 4.0 creates for the sector, and outlined how Lloyd’s was addressing the need to move the marketplace forward.
“Can we as an industry say that we have adopted technology and Industry 3.0 in the same way that many other industries have? I don’t think that we can,” he said, adding that, “the scale of the challenge ahead of us is enormous. However, we have a massive opportunity to leapfrog the third industrial revolution and get ahead of the game by fully embracing the fourth industrial revolution.”
“At Lloyd’s,” he continued, “we are working to address this by setting out our Future at Lloyd’s program which provides a blueprint to make Lloyd’s the most advanced insurance marketplace in the world. Every marketplace and everyone in our industry should have a similar plan in place.”
In the final presentation, Laurent Rousseau, Deputy CEO, SCOR Global P&C, considered those aspects of the industry that would remain unchanged during this period of rapid transformation.
“What is not going to change for reinsurers,” he said, “is the need for greater sophistication and depth. When I see companies focusing purely on the transactional aspect of our business, in my view they are losing sight of what really makes a difference which is the ability to deliver our own in-depth view of risk. What is also not going to change is that clients will continue to demand better prices and faster delivery. We should approach what we do in a client-centric way and focus our value proposition fully on the needs of our clients.”
