Wolfgang SCHWEHR Market Head Russia & CIS Swiss Re

Latest trends and opportunities in product development in both Life & Health and Non-Life

The Russian market is quite developed in its Non-Life product offering. At the same time, the insurance penetration in private business is still not very high and Russian consumers are generally very open to using new technologies. 99% of Moscow households have access to the internet, which is a record among European capitals.  There is clearly an opportunity for insurance companies to gain access to this client-base and offer them a better experience and additional services. As much as it is about what you sell, it is also about how you sell.  

On the life side, we have seen some good growth in risk products / protection products. Together with several big players on the Russian market, we have jointly launched cancer protection products. Various service components can be added to these products increasing the value for the end consumer.

Joint product development is clearly an area where we see growth opportunities for both our clients and ourselves on the Life and Non-Life side.

How insurance can create new sources of revenue and growth using digital platforms and ecosystems

Insurance, as such, is usually not very high on the agenda of consumers. At the same time, consumers are becoming increasingly demanding and all kinds of online transactions via digital platforms are growing.

In order to attract customers, and thus new business, it will be crucial for insurance companies to approach consumers via these digital platforms, tailor products to the consumers individual needs and to offer services as natural additions to the insurance product. It will also be important (and Net Promotor Score analysis proves this) to increase the frequency and quality of the interaction between the insurance company and its customers.

An ecosystem is a network of companies, institutions, individuals, and consumers that interact to create combined services of mutual value. Joining forces as the insurance company, the reinsurer, and third-party service providers and thus building up such an ecosystem, will enhance the customer experience and thus lead to new sources of revenue.

In Russia, we have already seen several examples where major insurers team up with partners from other industries, such as retail chains, taxi providers, travel platforms etc.

Regulatory environment and information exchange between countries/Implementing new solvency regimes - sometimes it is a bumpy journey, but it opens a lot of new horizons.

Russia is aiming to implement a new solvency regime within the next few years. Looking at the implementation process of Solvency II in the EU, 15 years after its first kick-off, when it was perceived by most European insurers as a time- and resource-consuming exercise. At least at the beginning. However, it seems that two years after its implementation, insurers in the EU value the fact that Solvency II, next to improved governance and risk management, provides much more transparency, for example, on capital intense lines of business and helps to optimize capital structures. The implementation period in Russia is expected to take much less time. Potentially higher capital requirements, securing the necessary resources and actuarial know-how when implementing a new solvency regime, the required data and IT infrastructure and thus the resulting costs will be something Russian companies will also have to deal with. Reinsurance can be a vital tool in the optimization of a company's capital management. Swiss Re has a proven track record of tailoring reinsurance solutions to the respective needs of their clients.

Telematics & Data Analytics - securing profitable growth in motor

We are living in a world where there is an abundance of data and its availability is expanding rapidly. In all industries, those companies which are able to collect, store, and analyze this huge amount of information are and will be even more so in the future, ahead of their competitors. More and more data will come out of cars and it will be crucial for insurance companies to be able to use these additional insights into drivers. This information will enrich the insurance companies already existing risk knowledge and thus secure profitability and enable growth.

Swiss Re's Motor Market Analyzer uses external data in combination with company data to further increase our client's understanding of the company's exposure to geographic accident risk, identify business opportunities and to benchmark its current performance against its potential performance.

Telematics helps to improve risk selection and retention, while easing claims processes and allowing to reduce fraud and claim costs. It has an impact across the whole value chain, generating benefits for both insurers and consumers. For example, it generates more frequent touch points with consumers, allowing the delivery of value-added services and increasing cross-selling opportunities.

Some of our Russian clients have already gained first experience with their own telematics solution or collaboration with an external provider. Often the systems are based on costly hardware or lack ways to fully leverage telematics e.g. in terms of data collection and scoring/tariff development. Also, not all insurance companies can afford building end-to-end telematics capabilities on their own.

Swiss Re has thus developed a telematics solution for our clients. Next to a white-labelled telematics app we offer scoring and actuarial support, assist in the product roll-out, and share the risk via reinsurance.

Insurance Ecosystems - the Russian reinsurance market in 2018?

Despite the global events in 2017 and the resulting situation of reinsurers, Non-Life prices did not go up as much as we had expected globally, including in Russia. However, they did stabilize and especially on loss-affected programs we saw price increases also in Russia. The main cessions in Russia are on the Property per risk side. At the same time, over the last years we have seen the trend towards more and higher claims affecting such cessions.
2018 also still finds us with a multiplicity of sanctions in place which local insurance companies and reinsurers have to deal with.

Contrary to Non-Life primary business (and thus also the reinsurance of Non-Life business), the Life primary business in Russia is heavily growing, mainly because of the investment type of products, but there is also a clear positive trend in the Health and Medical area.

Collaboration with local companies, considering the Russian state reinsurer's involvement, and what are the expectations through the end of this year?

We have longstanding relationships with local Russian companies and our cooperation is strong.

Of course, the Russian State Reinsurer has taken its stake in the Russian reinsurance market and thus the amount of freely available reinsurance cession has decreased.

Russian cedants still highly value our relationships as well as the financial strength, leadership abilities, support for managing complex risks and claims, product development skills and services offered by Swiss Re as a global leader in the reinsurance industry.

Only in very few cases, we met with minor share reductions due to mandatory cession to the RNRC, but the majority of clients loyally rewarded us with continued meaningful shares given the fact that Swiss Re offers more than pure reinsurance capacity. We expect this to remain unchanged also for the future.

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