Insurance sector to embrace new market dynamics:Swiss Re
The Swiss Re Institute estimates the global size of the insurance market to be at USD 4.7 trillion. Roughly 2 billion people worldwide have no access to insurance, resulting in a very large protection gap. Therefore, a real potential for the re/insurance industry exists to support the global population
Swiss Re sees some of the current improvements in the overall market environment as a chance for the insurance sector to embrace new market dynamics; for example, the increased use of digital solutions.
Looking ahead, the continued growth of risk pools combined with the large and growing protection gap, represent the most significant growth opportunities for the industry.
Swiss Re's CEO Reinsurance, Moses Ojeisekhoba, said at Monte Carlo: " Although the market environment remains competitive with an abundance of capital, the long-term opportunities that lie ahead are positive as we address the very large protection gap that still exists. I am optimistic about our future growth."
Swiss Re's Group Chief Underwriting Officer, Edouard Schmid, says: "We believe an inflection point in the pricing cycle for non-life insurance has been reached. For 2019, we broadly expect stable rates, provided no major event happens this year. Underwriting margins in major non-life insurance markets need to improve more to deliver sustainable returns on equity."
Focusing on partnerships for future growth
Swiss Re's focus remains on its clients and on providing them with the required capacity, expertise and innovative solutions. The second largest global reinsurer aims to bring value by leveraging technology to support its clients' needs while also improving the efficiency of its own business.
As an example, the company offers a machine learning-based pricing engine to accurately price flight delay risks.
This enables automated claims payments and real-time steering. It is a flexible turn-key solution that can be leveraged for other parametric insurance offerings such as earthquake coverage.
In addition, advancements in technology are expected to bring many benefits to the re/insurance industry across the whole value chain (i.e. distribution and sales, underwriting, claims, solutions & services, and operational backbone).
Technology is also changing the nature of risk itself – both mitigating and creating new categories of risk.
Moses Ojeisekhoba, said: "In our view, trying different solutions aimed at addressing the protection gap is the only approach that will make a material difference. We already see that various elements of new technologies afford us an opportunity to break down some
of the barriers.
Addressing the challenges and opportunities of a very large protection gap
The natural catastrophes in 2017 showed the importance of insurance coverage and once again highlighted the protection gap. It persists in emerging as well as in advanced markets, and across all lines of business –with a global estimated premium potential of USD 800 billion.
Just to compare: The Swiss Re Institute estimates the global size of the insurance market to be at USD 4.7 trillion. Roughly 2 billion people worldwide have no access to insurance, resulting in a very large protection gap. Therefore, a real potential for the re/insurance industry exists to support the global population.
Global natural catastrophe losses totaled USD 2 trillion over the last decade,70% of which were uninsured, according to estimates of the Swiss Re Institute.
The uninsured losses from natural disaster events are expected to exceed USD 150 billion annually, underlining the need to close that gap and help societies better protect their people and assets against risks.
Such statistics are sobering, and for re/insurance to make a difference,Swiss Re and the industry must seek to address the key drivers that help create this gap, such as lack of awareness, access, affordability and understanding, as well as product design elements. In this context, having close client relationships, offering know-how and expertise and supporting clients with large transactions as well as new, innovative, technology-driven solutions will be critical for success.