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EAIC Today Day Three 2016

News FRIDAY 14.10.16 Insurers must work to close protection gap There is insufficient insurance demand in Asia because of a lack of trust between policyholders and insurers, Franz Josef Hahn, CEO of Peak Re, told EAIC Today. “If insurers can provide greater transparency in their information provided, design simpler and more customer-friendly insurance products and buying channels, and keep regular contacts with their clients, this will help build understanding, trust and loyalty among customers,” he said. “When there is trust, customers will be more willing to buy insurance, and this will close the protection gap.” The protection gap is a hot topic in Asia, with insurance growth failing to keep pace with economic development. “It is alarming to note that about 75 percent of the losses incurred by natural catastrophes in Asia so far this year were not insured,” said Hahn. “Millions of people across our region are either underinsured or not insured at all. The social and economic effects on communities with no insurance are enormous as these unfortunate events will force people back into poverty. The insurance protection gap in Asia is a societal issue which we can help change.” Faced with a declining appetite for insurance (evidenced by shrinking global insurance penetration since 2007), Hahn believes it is vital for reinsurers to find solutions on how to grow the overall market by generating new business and tapping unserved or underserved segments of the market—be it through product innovation, geographic expansion or simply by “It is alarming to note that about 75 percent of the losses incurred by natural catastrophes in Asia so far this year were not insured.” bringing new cedants or risks to the market. “This will require long-term investments, commitment and, in particular, an entrepreneurial and hands-on approach. Microinsurance in frontier and emerging markets is a great example for providing protection to previously uninsured markets or parts of society,” he said. Franz Josef Hahn Reinsurers, based on their product expertise and knowledge of local market conditions, are well positioned to facilitate the further growth of microinsurance, he added. “There are ways of supporting emerging markets via different reinsurance initiatives— Peak Re alone already underwrites seven different programmes across Asia in lines such as trade and credit life, agriculture or property, sometimes through public-private partnerships with governments.” Rapid change Hahn believes that reinsurance is undergoing rapid and fundamental change, and much of this change is being implemented in Asia. “Old business models are breaking down and becoming irrelevant as a new generation of buyers appears,” he said. “For Peak Re, our customers see inefficiency and redundancy in the provision of reinsurance, and they are driving these changes.” Perhaps the most significant trend for Hahn is the need to ensure Peak Re is relevant to its customers and the markets it serves. “Insurers and their reinsurers exist to pay claims; collectively that is our primary function. Therefore, at Peak Re, we believe the most significant way we can be relevant is to focus on the most efficient payment of claims. “One of the best moments for me this year was when Peak Re was praised by our client and their broker on our speedy and efficient claims settlement. We also came out as the fastest reinsurer to pay claims in a recent internal client audit. Last year, 80 percent of all our claims were paid within five working days.” Peak Re aims to become more relevant, and Hahn believes it is making progress on this: around 80 percent of additional business comes from existing clients. “This assures our client base that we offer relevant reinsurance solutions,” he said. “We also aim to continuously grow our business. We have recently increased our capital by $100 million and this will allow us to continue to diversify our portfolio, both organically and via strategic opportunities.” “Old business models are breaking down and becoming irrelevant as a new generation of buyers appears.” Peak Re’s Zurich branch is in the process of being transformed into a fully licensed subsidiary, and the company has just completed its first merger and acquisition, with the acquisition of a 50 percent stake in Caribbean insurer Nagico. “We want to grow our customer base as a trusted partner. We would like to be seen as a mature business partner even though we are still a young company,” said Hahn. “We want to grow wisely, and to build and enhance our brand, and we will do so through recognition from our clients and peers.” n www.intelligentinsurer.com | www.bermudareinsurancemagazine.com DAY 3: Friday October 14 2016 | EAIC TODAY | 17


EAIC Today Day Three 2016
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