GC: Industry must adapt and innovate to fully grasp opportunities

A series of fundamental disruptive forces are driving monumental changes in the global economy at an unprecedented rate. These forces compel the (re)insurance industry to adjust to the new reality and capitalize on the opportunities created, according to Victoria CARTER, Vice Chairman of International Operations at GUY Carpenter.

"Four major disruptive trends - expanding urbanization; technological advances; ageing population; and increasing connectivity are profoundly altering the foundations of the global economy at a rate light years faster than the rate during the industrial revolution," says Ms. CARTER.

"Rapid urbanization is occurring in emerging markets, tilting the global economy on its axis toward territories in the East and South experiencing economic ascendancy," Ms. CARTER continues. "By 2025, almost half of the companies with revenues in excess of USD 1 billion will be headquartered in markets such as Mumbai and Shanghai along with rapidly expanding hubs such as Hsinchu in Northern Taiwan and Santa Catarina State in Brazil."

"We now work and live in a hyper-connected world, from trade and capital, to the movement of people and transfer of data," Ms. CARTER says. "The surge in technology-driven connectivity in particular is spawning a new phase of globalization full of opportunity, but equally exposed to rampant volatility."

These waves of change are growing exponentially and impacting all sectors of society, including sweeping away many of the assumptions, accepted truths and standard practices that have held firm for decades. "The (re)insurance industry, faced with a world that is being radically altered," Ms. CARTER asserts, "must re-evaluate its role and recognize that the traditional business model is not designed to meet the demands of this new environment, even though it may continue to generate revenue."

The (re)insurance sector must also recognize the potential threats this creates to its fundamental role. "The primary insurance product is becoming increasingly commoditized, while digital firms and service providers are beginning to supplant the role of the (re)insurer," Ms. CARTER warns. "New technologies are reducing the need for certain forms of cover and in some cases making them potentially obsolete. All of these factors are combining to diminish the role of the insurer."

To maintain its leadership the industry must acknowledge that fundamental change is required and actively seek out the opportunities these forces create in their wake. "The industry can no longer rely on extrapolating past experience into the near future to define what it delivers now - the pace of change is simply too fast and the level of disruption too great," Ms. CARTER states. "We must innovate, change and adapt, as well as seek opportunities to work in tandem with leaders in other markets, such as "fintech" companies. (Re)insurers need to embrace this period of transformation, boost the potential it creates and redefine their future role and relationships with clients."

(Re)insurers have to move beyond standard insurance parameters into new growth areas both in personal and commercial lines. "We have already witnessed the potential created by cyber," Ms. CARTER highlights, "and that will grow exponentially as the world becomes increasingly dependent on e-commerce and cloud computing. We must seek out opportunities to help reduce the unsustainable public sector debt levels generated by an ageing population, seeking to expand involvement in long-term care. We must look to support (re)insurers by providing the secure platform that serves as a springboard for innovation."

"For every industry transformed by disruptive forces, the net result has been growth," Ms. CARTER concludes. "It is up to the (re)insurance sector to grasp the myriad opportunities this environment creates and drive the industry transformation that needs to take place."

Related articles

photodune-3834701-laughing-girl-xs

Monte Carlo hot topics

As the 60th edition of Les Rendez Vous de Septembre closed its gates on September 15th, the re/insurance world had its eyes on the Monte Carlo, where the current trends future expectations and industry disruptors are being the focal points of the discussions.

2016-09-12

JLT Re: Sector in danger phase regarding the release of reserves

The re/insurance sector is in a danger phase in which reserves are being released faster than accident year experience would dictate, the situation being similar to the 1998-2000 interval, says JLT in its viewpoint "Enough in Reserve?" released at Monte Carlo.

2016-09-13

AON: Reinsurance demand increasing as growth opportunities emerge

Reinsurance demand has increased over the past 18 months, with the cession ratio across the global property and casualty insurance industry registering a small rise for the first time in several years, and the trend expected to continue for the remainder of 2016, according to the September 2016 edition of AON's Reinsurance Market Outlook report.

2016-09-13

HANNOVER Re expects to see greater stability overall in both prices and conditions fopr the January renewal season

In the context of a cvasi unchanged property and casualty reinsurance global market from the previous year, still governed by an intense competition, HANNOVER Re expects to see greater stability in prices and conditions for the treaty renewals as at 1 January 2017, the company's representatives said in Monte Carlo. Also, with Solvency II influencing upon the purchasing behavior of insurers, opportunities for reinsurers should continue to be available.

2016-09-12

MUNICH Re EUR 500 million in premium volume from innovative products

Increasing digitalisation and interconnection of the world in almost all areas of the economy means that risks are taking on new dimensions, both private individuals and companies seeking insurance protection for this exposure. Global premium volume for cyber insurance is currently around USD 3 billion, but it is expected to rise to USD 8-10 billion by 2020, said the MUNICH Re's representatives at a press conference in Monte Carlo.

2016-09-12
photodune-3834701-laughing-girl-xs

Swiss Re: Technological progress will change business models

Even though macroeconomic conditions and the overall industry environment remain challenging, Swiss Re believes that technological advances will create new and valuable efficiencies. The 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.

2016-09-12

Swiss Re sigma: Demand for customised reinsurance and insurance solutions is growing

The insurance industry's consolidation, as well as globalisation of risks, technological innovations, and regulatory reforms have driven an increasing sophistication in the capital and risk management of insurers and large corporations, shows the latest SWISS Re sigma report released in Monte Carlo. "This has led to higher limits and higher retentions, as well as the substitution of local contracts with larger and more complex solutions", says Swiss Re Chief Economist Kurt KARL, stressing out that. "this goes hand-in-hand with a greater need for tailored re/insurance structures that address unique situations and can sometimes be enhanced with innovative features to meet specific client needs."

2016-09-12

Meet us in Monte Carlo!

Will you be in Monte Carlo at "Les Rendez-vous de Septembre 2016"? Visit our XPRIMM Stand at the Fairmont Hotel! You can find there the latest issues of our XPRIMM Publications specialized magazines and you will also receive a free copy of the XPRIMM Insurance Report!

2016-09-09

ON THE MOVE

TOP EVENT

61st "Rendez-Vous de Septembre" ends today in Monte Carlo: review

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers ends today in Monte Carlo. The Nat Cat insurance protection gap, as well as the global insurance market readiness to deal with the increasing complexity of the cyber risks were among the most debated topics.

14.09.2017

photodune-3834701-laughing-girl-xs

MONTE CARLO: Live news from the "Rendez-Vous de Septembre"

The 61st edition of the "Rendez-Vous de Septembre", the annual traditional meeting of reinsurers has started yesterday in Monte Carlo. XPRIMM publications on the CEE, SEE and CIS insurance markets are available at the XPRIMM stand in Fairmont Hotel as well as at the other event's venues.

10.09.2017

See all