Swiss Re CEO’s vision for insurance
The reinsurance business is facing
“revolutionary” changes through the
introduction of new technologies such as
blockchain, while the primary insurance market
will receive a boost through the widespread use
of digital personal assistants, Swiss Re CEO
Christian Mumenthaler suggested at the 2017
Monte Carlo Rendez-Vous.
The use of blockchain, a mutual distributed
ledger which is owned equally by all partners
and dominated by no-one, is expected to reduce
inefficiencies in the exchange of data between
A group named B3i has brought together
15 insurers and reinsurers, working on a joint
distributed ledger for reinsurance transactions
driven by blockchain technology.
This new technology may result in significant
change for the re/insurance industry. Because
the risks will all be public, it will be a much
more transparent market, where everyone
knows who owns which shares in a programme,
This is likely to lead to a completely
different risk trading system, similar to an
exchange platform where reinsurers may bid
for certain risks, he added. This will allow for
an easy change in ownership of risks and carry
very low transaction costs. “That would be
revolutionary,” Mumenthaler said.
On the insurance side of the business, he
believes that technology has the potential to help
to reduce the protection gap. Digital personal
assistants such as Apple’s Siri or Amazon’s Alexa
will become so intelligent and sophisticated that
in the future people will have actual conversations
with them and be in constant dialogue.
As trust in the system evolves, Mumenthaler
thinks that this will facilitate the sale of
insurance cover. Personal assistants will
recommend insurance products that perfectly
fit the needs of an individual and buy it on
behalf of the person. “This will close a lot of
the protection gap,” Mumenthaler believes.
While such a development may take a few
years to become reality, bundling insurance
with products such as cars is likely to become
widespread and change distribution in the short
term. A carmaker such as Tesla would pay
potential claims, Mumenthaler noted.
The downside is that the digitisation push
which is set to transform the re/insurance
sector will also increase society’s vulnerability
to cyber attacks.
“It will be part of our lives, similar to the
nuclear threat,” Mumenthaler said. “That’s the
reality we will have to get used to.”
For the re/insurance industry, cyber
represents a significant accumulation risk. The
internet can be brought down with potentially
catastrophic consequences, according to experts.
This means that governments, as with terrorism
or nuclear threat, will have to take the role of
insurer of last resort, which will allow the private
sector to participate in part of the risks.
The potential of cyber risk, which may be
so large that it is not insurable, is unlikely to
deter the trend to digitisation, however.
“The benefits of technology will be so big
that we will just take the risk,” Mumenthaler
PERILS aims to be the ‘one-stop agency’ for nat cat data
The systematic collection of high-quality
natural catastrophe exposure and actual
event loss data in some of the new markets
PERILS has expanded into will prove
invaluable for companies constructing risk
models covering those territories.
This is according to PERILS CEO Luzi Hitz
and Darryl Pidcock, head of Asia-Pacific at the
company, who told Monte Carlo Today it wishes to
become a one-stop reporting agency for such
data. It now covers Europe, Australia, Canada
and Turkey, but is looking to expand further.
“If you don’t have someone carrying out
this type of data collection, you do not really
have a benchmark to ask whether models are
accurate or not,” said Hitz.
He believes it is crucial to collect reliable
data after an event in order to do a proper risk
assessment, although this takes time.
“Without the data, people start to talk about
the projected model losses, even if the reality
is quite different,” he continued. “Then they
start to calibrate models on inaccurate model
numbers. It’s a vicious circle.”
When PERILS was launched it covered
only Europe, but it was quickly realised that
there would be strong demand for its services
in other major territories such as Australia,
PERILS started covering Australia on
September 12, 2016 and Turkey on November
25, 2015. Its next market will be New Zealand.
In February 2017, PERILS entered a strategic
alliance with Catastrophe Indices & Quantification
(CatIQ) to provide loss data for Canada via the
PERILS industry loss index service.
Luzi Hitz (left) and Darryl Pidcock
Of the total $3.1 billion of PERILS-based
limits at risk as of August 31, 2017, $3 billion
cover Europe, $1.38 billion cover Australia and
$0.23 billion cover Turkey. These figures were
up 17 percent year on year. n
26 | MONTE CARLO TODAY | DAY 3: Tuesday September 12 2017 www.intelligentinsurer.com | www.bermudareinsurancemagazine.com