XPRIMM: Extreme weather-related events are becoming obviously more frequent and intense. In your opinion, how strong was the impact of these events on the insurance industry in Russia and the CEE?
Mira Kiridzic-Bugler: As far as CEE (Central and Eastern Europe) is concerned, we have been discussing the topic of secondary perils for some time now and in the last two years we had several events in the region, hail events in Austria, a tornado in the Czech Republic, earthquakes in Croatia, just to name few. Our clients experience a growing demand for insurance after such events. The question is if this is going to be only a short-term impact or if the overall awareness is changing. I think that we have a long way to go in this regard, and re/insurance companies and governments need to join forces to close the protection gap. Looking at the re/insurance industry, there are many discussions on the modelling side, with a focus on the re-evaluation of existing models and analyses if covers are sufficient.
Christian Kreutzer: In Russia and CIS (Commonwealth of Independent States) countries, we have a situation where natural perils are widely uninsured, and therefore the impact on the insurance industry has been very benign. However, the economic impact and the pressure on state budgets is clearly on the rise. For example, we have seen a heavy rainfall event in the Moscow Metropolitan area, which led to damages on buildings and cars.
XPRIMM: It is generally acknowledged that in the countries of the CEE and ex-Soviet regions there is a very large insurance gap, especially in what the natural hazards are concerned. How do you comment on this issue? Do you think there are solutions in place that could help increasing the insurance coverage in the area?
Mira Kiridzic-Bugler: The insurance protection gap is a worldwide topic. In CEE countries, salary level and missing trust in insurance are additional factors that contribute to a low insurance penetration. Raising public awareness for the value of insurance is an important task that we are working on closely together with our clients. I also expect that the demand for insurance will grow, as we will experience such events more frequently in the future. On the other side, insurance products need to become simpler and easier to understand with short and transparent conditions. This is another area that we are focusing on together with clients. I think there is much potential in parametric solutions, where the technology has improved significantly over the last couple of years. Swiss Re offers a range of innovative weather-related index-based products and solutions, in the agricultural space as well for flood and earthquake protection. These are easily customisable solutions that bring consumers and companies instant, hassle-free payouts based on predetermined triggers.
Christian Kreutzer: Looking at Russia and CIS countries, it has historically been the role of the state to compensate households and companies for the damage. Due to this, there was little interest on the side of consumers and companies to protect their properties.
However, we are now seeing first signs that the insurance industry wants to enhance its offerings and one window of opportunity could be to offer quick partial compensations to households as the payout of state budgets often takes long, while people have an immediate need for compensation. Swiss Re has a broad solution offering to support insurance clients in the development of such products.
XPRIMM: Last years have brought in the region weather related events rarely seen before, as tornadoes, wildfires, extreme drought etc. Are re/insurers prepared to face and provide protection for these events?
Mira Kiridzic-Bugler: It is clear that advances with regards to claims handling are needed, and here digitalisation will play an important role. However, prevention is equally important as after-event measures. Significant improvements are needed in both areas, and we are supporting our clients with our expertise and solutions in this regard.
XPRIMM: New technologies are providing for unprecedented capabilities of risk monitoring or even for the use on a larger scale of insurance solutions as index insurance etc. In your experience, how much are already in use such solutions in the region? Also, are such solutions available and affordable on a large scale for insurers in the CEE and ex-Soviet areas?
Mira Kiridzic-Bugler: In the CEE region, we have made positive experiences in the agricultural sector and have implemented several products in the region.
Christian Kreutzer (Russia&CIS): Agriculture is a major economic factor in Russia and even more in ex-Soviet areas. Swiss Re offers parametric innovative parametric solutions in this space that utilise satellite technology to measure moisture in the soil and on that basis provide index insurance against drought for farmers.
XPRIMM: What would be, in your opinion, the most challenging climate change-related issue for insurers? Could you also name some opportunities born by this change?
Christian Kreutzer (Russia&CIS): Russia and CIS is such large block of land that it is hard to make a general statement about how climate change will affect the entire region, but we foresee some parts getting wetter and others drier, and both is a major challenge for the agriculture industry and food security of nations. Insurance is key to help to mitigate these impacts and at the same time major investments are required, for example, flood protection measures to secure the insurability of such perils.
Interview conducted by Daniela GHETU