Swiss Re views the integration of new technologies as both a critical opportunity for growth and the solution to many of the challenging market conditions that have tested the re/insurance industry in recent years.
This is according to Moses Ojeisekhoba, CEO of Reinsurance at Swiss Re, who told Reinsurance News that improvements in technology are helping the company to tackle the protection gap in both emerging and more developed markets.
“In line with our vision to make the world more resilient, we see significant opportunities to close the protection gap across the globe,” Ojeisekhoba said in an interview. “While this has a natural focus on high growth markets, we are also working to improve protection in mature markets.”
“For example, the overwhelming majority of US homeowners don’t have flood insurance,” he explained. “We are at the forefront of creating a robust private flood insurance market and building up this protection particularly as improvements in technology allow insurers to more accurately price the risk and be more confident in writing profitable business.”
In addition to winning new business on the property side, technology is helping Swiss Re to meet evolving needs and retain customers on the life and health side, Ojeisekhoba added.
“We know that it costs more to acquire a new customer than retain an existing one so we are using our data analytics and sophisticated predictive modelling to analyse an insurer’s portfolio and find the lapse risks,” he said.
“We then help them apply behavioural economics to improve customer communication touch points. This work creates value for the life insurer and peace of mind for the end consumer who has maintained their financial protection.”
One of the major challenges for re/insurers going into 2019 is finding new ways to achieve greater efficiency in their business models and capital deployment, given the competitive pricing environment and ongoing low interest rates.
In this area too, Swiss Re views the integration of new technologies as an important solution, Ojeisekhoba said, particularly as it relates to the nature of the value chain and the types of risks that re/insurers cater for.
“From risk/customer acquisition, all the way to fulfilment of insurance policies in the form of claims, we see advances, which are generally positive and I believe will ultimately lead to greater effectiveness of our industry,” he remarked.
This renewed focus on efficiency has partly come about in response to the elevated catastrophe losses of 2017 and 2018, which have called into question the assumptions of re/insurers’ catastrophe models.
In particular, an increase in the frequency of very large wildfire losses and the the deviation of the scale of losses from some recent windstorms have raised concerns.
“This is our business and we’ve always had to deal with changes in exposures and losses,” Ojeisekhoba explained. “As in the past, I expect that we will change some of the parameters and assumptions in our models based on the new data from these losses.”
However, deeper integration of technology into business models has also created new emerging risks for re/insurers to deal with, Ojeisekhoba cautioned, most notably in terms of cyber.
“Its clear that cyber has some unique challenges, especially as it relates to the aggregation topic,” he said. “This calls for a cautious approach.”
“We invest in R&D to further increase our knowledge/expertise and in the case of cyber, we also work with organisations around the globe to understand the risk better and build the right ‘boundary conditions’ for a sustainable insurance market.”
Addressing other key challenges that will increasingly impact the global re/insurance industry, Ojeisekhoba highlighted the threat of rising nationalism and its resulting protectionism and tighter regulations, as well as the slowdown of global economies and the deteriorating macro-economic environment.