Mathias Jungen, Swiss Re Brasil and Southern Cone CEO, and Moses Ojeisekhoba, Reinsurance Swiss Re CEO, observe in exclusive interview, important issues related to reinsurance industry. Then the reflexions of Moses:

Insurance Corp: The last two years have been turbulent for the industry. How do you feel about what lies ahead?

Moses Ojeisekhoba: Indeed, the last two years have been plagued by high catastrophic losses, but that’s why our industry exists: to pay claims promptly and help people recover and rebuild following devastating events. It’s been a test of resilience, but we’ve answered the challenge and delivered on our promises through these tough times. This proved our sustainability, which sets us up well for the future.

Going forward, we’ll continue to see exposure grow as the population increases and people live longer and accumulate more assets, especially in areas prone to natural catastrophe. Our job as an industry is to ensure that people have adequate insurance. We need to shrink the gap between what is covered and what’s not, and ensure we’re pricing risk appropriately. It’s important we continue to focus on how we sustainably serve the needs of our customers.

IC: What opportunities do you see in particular?

MO: We see opportunities in parts of the world that are poised to experience economic growth over the long term.  Latin America falls into this category, as well as parts of Asia and Africa. Economic growth will lead to increases in per capital GDP, the assets that people acquire, and the need for risk management for all other forms of exposure. In an increasingly connected world, we are seeing new risks emerge (e.g. cyber) and the nature of risk being transformed by technology. As an industry, we have a significant opportunity to work with consumers, primary companies and governments to address these growing exposures.

IC: What can the industry do to address the protection gap?

MO: It’s important to first consider why this gap exists to have any sort of chance of addressing it. We know that affordability, product design and access to products play a major role. The fact that consumers aren’t aware of, don’t understand or have no interest in insurance products and their true value doesn’t help. These issues must be addressed in order to close the gap. To really make a difference, we need to improve the customer’s journey and make products easier to access.

We need products that are more customised to an individual’s needs and lifestyle. Finally, we must create ways to more accurately price risks and increase customer transparency to educate them on the value of their policy and help them understand their own risk profile. We strongly believe technology presents a tremendous opportunity to remove these barriers.  The key for re/insurance is to unlock the potential.

IC: Can you give some examples of where the industry is making headway against the underinsurance problem?

MO: We are making life insurance simpler with technology. Our Magnum suite of automated underwriting solutions is helping insurers to simplify the application process, and reduce the time it takes to issue a policy. Magnum is enabled for mobile, so customers can interact with their insurer or agent anywhere. Insurers benefit from improved take-up rates; better, faster underwriting decisions; and more tailored products. This in turn creates more engaged, satisfied consumers.   

In China’s Heilongjiang province, parametric insurance is helping farmers stay in business and out of poverty in the event of flooding, excessive rain, drought or low temperatures. Using satellite images and weather data, we monitor growing conditions, and if certain triggers are met farmers receive an instant payout. It’s a great example of a public-private partnership that also reduces stress on government funds and helps guarantee food security.

IC: Besides the protection gap, what are some other challenges facing the industry?

MO: A current challenge is the excess supply of capital, driven mainly by the monetary policy over the last decade. This has created misalignment between the underlying risk and the price. Companies are willing to generate returns below their cost of capital. This isn’t sustainable in the long term and must be addressed.

Another challenge I would mention is the growing trend of nationalism and protectionism. This is not only an adverse operating environment for reinsurers, it’s also bad for consumers. This trend will increase the price of insurance products and hinder our chances of closing the protection gap.   

IC: Focusing on Brazil, how do you foresee Swiss Re’s participation in the market?

MO: Swiss Re has been in the market for 22 years and remains committed for the long-term. Brazil is one of our core high-growth markets, and we will continue working with consumers and local insurance companies to make sure that together we can create the right products and services that help the market continue to grow. Our local teams have the support of the entire Swiss Re organization and the benefit of learning from our work in other markets around the world where we face similar challenges and opportunities. We’re looking forward to the challenge!

Swiss Re is working to develop a number of new products in Brazil

Insurance Corp: How does Swiss Re, a global reinsurer, look at the Brazilian market?

Mathias Jungen: Swiss Re has been present in Brazil since 1997, initially providing reinsurance capacity through the IRB, and then directly to insurance companies after the opening of the market in 2008.

More recently, Swiss Re has defined the specific High Growth Markets across the globe, that occupy a central place in Swiss Re’s strategy. Two of those High Growth Markets are in Latin America and Brazil is one of them!

Establishing a strong, long-term presence in Brazil and solidifying relationships with our clients is key to our Strategy, even if there are temporary challenges in the short term. In addition to the resources supporting the Brazilian operation from abroad, Swiss Re has 70 employees located in Sao Paulo that are fully dedicated to the reinsurance business. The company also has one local and two admitted reinsurance licenses in order to offer reinsurance capacity in a flexible manner.

The group also has a primary insurance carrier in Brazil – Swiss Re Corporate Solutions, whose CEO is Luciano Calheiros. The insurance and reinsurance operations are strictly separated and do not share any business information.

IC: What are Swiss Re’s priorities in Brazil for 2019?

MJ: Over the past three years, Swiss Re has invested in its capabilities to back insurance companies with traditional reinsurance capacity and to work closely with them to support their broader business goals.

These capabilities include dedicated teams that can perform advanced data analytics and tools to assess specific risk exposures, both for man-made risks and natural disasters. Swiss Re has also developed an array of structured reinsurance solutions to address capital or liquidity needs.

Bringing this broader and more strategic value proposition to our clients represents a key priority for Swiss Re in Brazil.

IC: Do you believe that there is also room to bring new products to the Brazilian market?

MJ: Absolutely. We all know that people and assets are often either uninsured or underinsured in Brazil today. I am deeply convinced that the insurance penetration can be increased by introducing products that are better suited to the specific demands of certain segments, especially for personal lines and small commercial lines.

These new products could be either developed from the ground up or replicated based on experience from other markets with similar demands.

Swiss Re is working to develop a number of new products in Brazil. One example is new health covers, including one for critical illnesses, which can generate a significant financial strain in a person’s life, and specific products for the elderly and diabetes. Swiss Re is also working on automated underwriting solutions that can improve the experience of insured and reduce protection gap.

On a broader basis, I believe that we as an industry still have a significant task ahead of us in developing affordable products that will enable larger segments of our society to access insurance.

Swiss Re is certainly committed to work towards meeting this challenge!