Nicola RAUTMANN: Making use of digital technology could actually have an even stronger impact on insurance in an environment with currently low insurance density. In CEE markets insurers are often quite open towards the use of advanced technology. On the customer side tailored products making use of the preferences of customer groups in scope and distribution could close existing gaps.
XPRIMM: In your opinion, what are the insurance classes most opened for InsurTechs partnerships, where it is easier to reinvent the present business models?
Christian ENGELN: While InsurTech will impact most if not all lines of business, we expect it first to take root in personal rather than in commercial lines. Consumers may demand holistic products that do not easily fit into today's line of business approach. We're also seeing the creation and expansion of ecosystems, such as in the health sector with smart mobility. InsurTech will allow an end-to-end digital process - and this is the customer journey experience millennials are demanding.
XPRIMM: The experts pointed out that traditional insurance business will not to be fully replaced by InsurTech companies, as the insurance sector is highly regulated and capital-intensive, with high barriers to entry. What is your opinion in this regard?
NR: The regulator will take a close look at new insurance operations, no matter what technology they use, especially if they involve insurance products for private consumers. Customer protection is a growing aspect which also has a bearing on insurer and customer communication. In addition, the capital requirements for covering insurance risks form another part of the framework in which start-ups and new players are also operating.
XPRIMM: Speaking about the Russian insurance market, will digitalization impact mainly sales and underwriting or it will be more on the claims management side?
CE: We currently expect the immediate impact to be on sales, with an increased ability to reach clients and offer cross-selling of products. Data could be pre-filled, which is likely to increase sales conversions. The full benefits of digitalization however will depend on the extent to which data owners are able to make use of their data, including sharing it with other parties. For Russia, most insurers will need to invest in both the quality and quantity of data before reaping the full benefits of digitalization. Without good data, the benefit of digitalization is limited.
XPRIMM: How does Swiss Re want to know about the innovation needs in the Russian insurance industry? Are these needs the same as in other markets?
NR: The needs in a market like Russia are a key topic primarily for Russian insurance companies. Swiss Re wants its own network of experts to foster exchange on the topic of innovation with the experts of the Russian insurers. We would like to bring in the knowledge we have gained in other markets and the experiences we have made with new products tailored to the needs of customers. In general, these needs differ greatly between markets. However, if the direct customers are in similar circumstances, their needs and the corresponding products may also be similar. The same applies for sales channels or services.
XPRIMM: Do you consider that the Russian market is missing out certain technologies and what are those?
CE: The technologies currently being discussed in Russia are more or less the same as the ones in western markets: everything around big data and data analytics, machine learning, Blockchain etc. I would be surprised if the Russian market failed to notice an important new technology. Indeed, in some cases Russian InsurTech companies are among the frontrunners, eg in digital P2P insurance and data science.
XPRIMM: Telematics is one of the most debated subjects related to the motor insurance. Do you think it is an appropriate subject for the Russian market in the near future, considering the low level of premiums for this segment in Russia?
CE: Definitively yes. For a number of reasons, we believe that Russia is an even more interesting market for telematics than most of the western European markets.
XPRIMM: How does Swiss Re embrace new technologies and what is your strategy for knowledge sharing in this area with your Russian clients and market overall?
NR: Swiss Re uses new technology in two ways. One of them is for our own needs, eg to enhance our internal processes and tools as well as the interaction among our teams. The other area is to deploy them for the benefit of our clients. In Russia as a main market in the CEE area, we want to foster exchange with our clients. We do this in various ways, for example in bilateral discussions or the innovation fair we're hosting today. We believe that we can help to grow the innovative offering to Russian consumers and companies and benefit from the resulting business we share with our clients in the Russian market. Swiss Re's strategy aims at growing the share of such innovative products as part of our book of business.
XPRIMM: How would you describe Swiss Re's results in Russia in 2017 (premiums, lines of business etc.) and what are your goals till the end of this year?
CE: It's too early to say, as we aren't even halfway through 2017 yet, but we feel the pressure of lower margins and increasing competition, eg from the state reinsurer. Swiss Re's differentiating approach is to bring our global knowledge and network, and our deep technological expertise to our Russian clients, thus enabling strategic cooperation on common topics such as innovation.
The interview was realized on the occasion of the Swiss Re Innovation Fair, an one day event organized by Swiss Re in Moscow, on 11 July, for CEOs of Russian Insurance companies exclusively.
The starting point in irganizing the Frair was the already well established fact that the insurance market (not only) in Russia is going through a massive transformation triggered by economic pressure, new customer expectations and the digital revolution. Russian insurance companies are asked to reinvent their business model. Swiss Re's representatives as well as of several of the world's most promising InsurTechs have provided their opinions on two main topics:
- how can insurers benefit from disruptive innovation to become fit for the future
- how can insurers profit from partnerships with InsurTechs.