Republished with the kind permission of Insurance Day
The reinsurance industry must embrace technology and be more innovative if it is to remain relevant. This was a major theme at this year’s Rendez-Vous de Septembre in Monte Carlo.
Executives from across the profession called on the sector to react to the changing technological landscape or risk becoming obsolete. While most were in agreement that innovation must become a priority for reinsurers, how this is actually achieved was up for debate.
Dominic Christian, chief executive of Aon UK and executive chairman of Aon Benfield, said that the industry had a history of being able to innovate, naming credit scoring, multi-federal coverage and catastrophe modelling as examples. Christian called upon the industry to galvanise this innovate spirit and implement solutions sooner, rather than later. “We’ve shown we can innovate, we wouldn’t be here if we couldn’t. But we need to act more urgently," he said.
Senior industry figures said harnessing new technology was crucial in tapping into new areas of demand. Munich Re board member, Torsten Jeworrek, said innovation in areas such as product development, data analytics, automated underwriting and supporting digital business models would allow the reinsurer to “take advantage of profitable growth opportunities".
Speaking to Insurance Day, Moses Ojeisekhoba, chief executive of reinsurance at Swiss Re said that through exploring a number of technologies – ranging from big data and the Internet of Things to artificial intelligence – reinsurers were capable of having a better understanding of risk.
“All of these things ultimately allow us to better understand risk, and price them in a much more precise manner," he said, adding: "Technology is one way in which you can differentiate."
But there are are challenges. The reinsurance sector has a reputation of taking something of a back seat when it comes to technology. Richard Clark, director at Xuber, the software provider arm of Xchanging, expressed his concerns to Insurance Day said companies often took at "wait and see" approach to make.
"In the past they’ve stood back and done nothing until they get some certainty, however the time to act is now while you’ve got some breathing space to modernise infrastructure," Clark said.
Kathleen Faries, head of Bermuda for Tokio Millennium Re and chief executive of Tokio Solution Management,. said that while she perceived technological innovation was vital to the future of the industry, it can be difficult to do given day-to-day business pressure.
“It is difficult to completely focus on [innovation]. We still have a day job; we still have to make sure we’re running the business - that’s the really tricky thing with innovation," she told Insurance Day.
Yet, there was a sense that things were improving. Suki Basi, the managing director and founder of the risk management and advisory firm Russell Group, said the industry is finally waking up to the costs that can be saved though innovation in technology. “The industry has begun to recognise the value chain involved in innovation - they can aggregate better, create new products easier, deliver transparency," he said.
James Few, global managing director of reinsurance at MS Amlin, said although the industry had been slow in developing new products and harnessing new technology he was “more optimistic”.
There was near unanimous agreement from various senior executives that if the reinsurance sector did not get a handle on the situation soon, an outsider would come in and create a solution for the industry.
The chief executive of Google in France, Nick Leeder, warned reinsurers not to be complacent about technology. And while it was not part of Google’s strategy to enter the reinsurance market, Leeder said this did not mean other major tech firms would not do so. “You should take no comfort at all with me saying Google won’t do that – because someone else will play and have a good crack at it."
Pioneer Underwriters chief executive, Darren Doherty warned it is imperative to “turn the tide” with technology or risk loosing market positioning. “If we don’t innovate as an industry, someone else is going to come in and do it for us – that’s my biggest worry," he said.
Philippe Donnet, managing director and group chief executive of Generali, summed up a lot of conversations surrounding technology at this years Rendez-Vous de Septembre with the warning: "Without innovation we will die. We will disappear.”