With inflation currently remaining above historical peak, Swiss Re’s Head of Northern, Central & Eastern Europe, Frank Reichelt, discussed with Reinsurance News about what coping mechanisms the company have had to adapt to keep ahead.
“We are following the topic very closely with the support of our own research department. We have high-calibre economic experts there who also try to predict what’s going to happen in the next year and in the midterm future so that we can reflect on that,” he said.
“We are also listening to our clients, and we want to know and understand what they do in their portfolios. But we are also looking at the claims numbers, and trying to see if the numbers reflect the inflation, or if there is a time lag and things like that. Sometimes it’s different by client. Not too much in the same country, but country by country, market by market, there are some significant differences. So, we try to really understand what’s going on there.
“We also talk and discuss with our clients and partners that we share the increase in risk. This is basically the approach. If you don’t do anything, it could be that all the inflation risk goes to the reinsurer one-hundred percent. And as our industry is about partnering, we try to ensure that this inflation risk is shared between our customers and ourselves.”
Moreover, with the upcoming EMEA reinsurance renewals looming closer, Reichelt highlights how impactful the ongoing situation between Ukraine and Russia, as well as the current economic crisis will be towards the renewal season.
“The renewal season will be driven or affected by a number of different topics. The Ukraine war is certainly one and it coincides with other tensions around the world. The geopolitical situation is definitely a difficult one. The world is in a crisis and with that the industry is facing a crisis, a global crisis, and this will have an impact on what’s going to happen in the renewal season, no doubt.”
Additionally, Reichelt states whether he expects to see any significant rate rises within property catastrophic business in Europe, throughout the upcoming renewal season.
“We are in a situation where increasing demand is hitting a slightly shrinking supply, and in economics this is a moment where prices usually go up. It has been the other way around for a number of years. This year it feels different, the opposite.”
Reichelt also highlights what lines of business that Swiss Re potentially sees as areas that contain future opportunities for growth.
“Our vision at Swiss Re is that we make the world more resilient, and this covers basically all aspects of society, but if I were to pick one specifically, it would be the natural catastrophe business and the exposures we are seeing across the world. There is still a huge protection gap here. If we want to make the world more resilient, we need to close those protection gaps.
“If you look at the global situation, there are a lot of gaps across the lines of business. So, focusing on closing the protection gap – this is something that, in our view, will also produce growth in the portfolio.”
Furthermore, as technology continues to evolve and various insurers continue to find new ways to incorporate it into their business, Reichelt addresses how technological advancements are helping Swiss Re’s ability to enhance efficiency and provide further support for its clients.
“I would say the major focus really is to support our clients, to improve their business and make it more efficient, understand the risk better, and become more efficient in the process. Swiss Re tries to bring modern technology to clients to support their business because if their business becomes better, reinsurers will also benefit from that.”