Insider Engage

Data is an essential foundation for sound decision-making in any business. P&C (re)insurance claims teams have access to a great deal of data. That data may come from the company’s own policy administration system, from brokers or customers making claims, from loss adjusters, experts, consultants, market organisations, and feeds, of one kind or another, from a wide range of other external sources.

In this episode, Christian Mumenthaler, Group CEO, Swiss Re, shares how creativity can play a role in helping insurers and reinsurers manage risk, plus how diversification can help reinsurers balance their risks. He also discusses the potential role of embedded insurance to close the protection gap -- the difference between insured losses and the total economic losses from catastrophes.

Have the recent challenging dynamics in treaty reinsurance also been experienced in the facultative sector, and are there any particular US-specific trends? The facultative market is definitely experiencing some of the same challenges, and is affected by the same dynamics that we've seen in treaty. In terms of US cat market, on the facultative property, there's increased pricing, and we can see pricing pressures on the facultative US casualty side of the market too.

Aon has been involved in the climate space for some years now, so could you tell me what prompted the launch of Climate Risk Advisory? Over the past several years we've been seeing an increasing need across a broader set of Aon clients to get more in-depth catastrophe and climate insights embedded in their organisation. That’s been driven significantly by regulatory action, by investor questions, and by rating agencies which are starting to really look at climate change.

What is the backdrop for insurers’ need for capital management? Many insurers and reinsurers are experiencing reductions in capital adequacy. Capital has been declining over the past 18 months due to factors such as unrealised losses resulting from interest rate increases, equities market volatility, and increased catastrophe losses from the recent frequency of events coupled with higher reinsurance retentions. Persistent inflation is also continuing to impact capital.

How do you think the split of cat losses among insurers and reinsurers will influence APCIA conversations? There’s a healthy balance around insurance carriers having a degree of retention, and I think if you look over the past 10 years prior to the pandemic when we had around 2% inflation, we didn’t really make any adjustments to retentions.

What do you expect to be the focus of your conversations at APCIA? When it comes to casualty, I expect that the conversations will focus on the casualty headwinds going into 2024 and the need for insurance carriers to drive rate, connected to the view of loss trend versus rate adequacy. The need for a significant improvement in reinsurance terms and conditions, whether ceding commission reductions, XoL rate increases or structural change, will be another theme throughout the conference.

Aon has been involved in the climate space for some years now, so could you tell me what prompted the launch of Climate Risk Advisory? Over the past several years we've been seeing an increasing need across a broader set of Aon clients to get more in-depth catastrophe and climate insights embedded in their organisation. That’s been driven significantly by regulatory action, by investor questions, and by rating agencies which are starting to really look at climate change.

Aon’s Strategy and Technology Group launched just over 12 months ago. Could you describe its key offerings? STG has been operational in Asia Pacific for just under 12 months, and we have a growing team that is dedicated to serving our regional client base. We have three main focuses; strategy consulting in areas such as market entry and exit, capital strength, and growth – operationally and geographically.

What will be the key topics under discussion with clients at SIRC this year? Have the market challenges that were experienced earlier in the year started to abate? The challenges are abating and it is quite a positive picture.