The insurance industry can increasingly access new risk pools emerging from the integration of data, analytics, and technology that addresses the insurance protection gap, creating new opportunities for growth, according to Swiss Re.
Christian Mumenthaler, Swiss Re's group chief executive officer, said, “It's a special year this year, as it's the 60th anniversary of Les Rendez-vous de septembre. The industry has experienced many changes in this time. It is our goal to partner with our clients to help them tackle new markets and emerging risks also in the future. Being at the center of the technological transformation that is unfolding is a key part of the strategic framework we launched last December. With our knowledge and differentiation we want to seize the momentum so we can help our clients adapt and thrive. I'm proud to say that Swiss Re has been at Monte Carlo from the start in 1957 – being a strong partner for our clients and working together on smart solutions.”
In Swiss Re's view, technological developments will profoundly change the way in which the reinsurance industry develops, distributes, underwrites, and administers the insurance protection it sells to consumers. New technologies such as cognitive and cloud computing as well as big data will simplify and accelerate the industry's underwriting process and reduce the price of insurance protection overall. This development will allow insurers to tap into the vast insurance protection gap and build up new revenue streams. The biggest sources of value creation will be in reducing costs and creating completely new services, Swiss Re believes.
The main catalysts for change, according to Swiss Re, include:
- mobile-first preference from the end consumer (e-distribution),
- increasingly dynamic and regular consumer interaction with computers (digital advisors),
- an exponential increase of data on people and objects (e.g. Internet of Things, telematics),
- the common and secure use of distributed data (blockchain technology), and
- the ability to recognize patterns in large and unstructured data (artificial intelligence).
These technologies are expected to shift risk pools and create new opportunities.
The second quarter of this year was a reminder that natural catastrophes can happen in clusters, and this experience, combined with several years of decreasing prices, shows that the industry cannot be too far away from the bottom of the cycle. Looking ahead, Swiss Re expects price levels however to stabilize.
Price erosion in natural catastrophe cover is expected to slow down and stable rates are anticipated for the property per risk business. In liability lines, Swiss Re expects pressure on reinsurance rates to abate, while broad rate increases are possible in the case of deteriorating reserve adequacy across the industry. In specialty lines, Swiss Re expects differences in price developments by market and lines of business. High growth markets will drive long-term exposure growth. In auto, overall slight hardening is expected with differences by market. Increased loss trends have continued in the U.S., but accident frequency in the long-term is expected to decrease.
Learn more: www.swissre.com.
Victoria Spears
Victoria Prussen Spears is senior vice president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. A graduate of Sarah Lawrence College and Brooklyn Law School, Ms. Spears was an attorney at a leading New York City law firm before joining Meyerowitz Communications. She may be contacted at [email protected].