10 Questions for Swiss Re’s Ivan Gonzalez

Swiss Re's Ivan Gonzalez spoke with Risk & Insurance about inflation, climate change and property insurance, among other topics.
By: | June 13, 2022

Ivan Gonzalez, CEO, North America, for Swiss Re Corporate Solutions, recently gave some of his time to Dan Reynolds, editor-in-chief of Risk & Insurance®.  What follows is a transcript of that discussion, edited for length and clarity.

Risk & Insurance:  Ivan thanks for your time. One thing we’re really curious about is the impact economic factors like supply chain and inflation are having on your insureds. What’s your perspective on that?

Ivan Gonzalez: The short answer is very significant issues and it’s not only because you face, all of a sudden, disruptions in terms of the overall operating model; these disruptions have been very different in nature over a relatively short period of time.

What that means is that you have to look at a number of different topics, from very macro geopolitics, to maybe some more micro topics at a country-specific level or region-specific level that for a number of different reasons are impacting the overall supply chain.

The risk management has to be much more broad and comprehensive in nature. It needs to become even more proactive and in many ways, try to respond to circumstances in ways that simply we just didn’t experience as much in the last decade.

I’m going to call it a bit of a game changer in terms of how our clients need to assess this. It’s an existing exposure, but it’s also an emerging exposure at the same time, which is what makes it particularly challenging.

R&I: Where do you see the keenest need for support coming from your clients, Ivan?

IG: Well, there are three things specifically that they need. And I think that the first one is data. I think in the past, it was relatively straightforward for you to have a map of your specific risks.

Now all of a sudden, there’s so much disruption that you need to start to understand, okay, so how do you model certain scenarios? And what happens if suddenly, I face this specific circumstance?

In order to do that, you need data and once you have that data, the second question becomes how can you analyze and process that data?

It’s unfortunately not that straightforward and it’s not super consistent across our clients.

Some of them might have more sophisticated or less sophisticated tools to do that. I think that our ability as a company is that we have a number of these tools that can help them from a risk insight perspective to manage that.

The third point is once you have the data, once you have the ability to manage, process, analyze the data, is what do you do in terms of action plans? And I think there, we can also help as well. Those would be the main points.

R&I: I appreciate that. Moving on to climate change and I know Swiss Re is a very evolved company in that area in terms of its approach or its recognition of climate change. What are some techniques or tools that Swiss Re is employing with clients around protecting property and other assets given the ongoing climate change we’re seeing?

IG: I think the first one would be that as you said, Swiss Re has been dealing with climate change for decades now, and in that context, I think we’ve managed to develop our own proprietary models.

We have a very large research and development unit, which is our Swiss Re Institute, where we have more than 250 people on a dedicated basis, basically looking at all these different kinds of aspects of our modeling capabilities.

In that context, we’re making sure that we try to understand how the overall discussion and the overall assessment of climate change has evolved over time. The goal here is to try to understand where it might be heading and what do we do to position ourselves in that context? So that’ll be part of it.

The second one is what actions can we take?  We’ve been very vocal, both on the asset side, in terms of certain decisions that we take to manage our portfolio in a more sustainable way.

But also in terms of the liability side, in terms of the risks that we underwrite and the ones that we decide either now or over time to not underwrite simply because they are diluting a bit, the climate change agenda, the overall progress.

R&I: That leads to my next question. I wanted to talk to you and ask you this question, Ivan, as a leader of a team of underwriters, what are some of your toughest challenges in leading an underwriting team these days?

IG:  The one which is probably the biggest challenge is not simply relating to underwriting. It’s just how do we manage our people, support our people in terms of the transition from the pandemic to an endemic?

I think that’s a big part of it. Going to the more technical or the more specific areas of underwriting, I think it probably has to be inflation. First and foremost, making sure that our teams understand what inflation means.

You have basically almost a decade where there’s a relatively large number of underwriters who haven’t really had to factor in inflation as part of their analysis in the past, at least in developed markets. And then all of a sudden, we have very real inflation in a number of areas that we need to think through, how do we position it, manage it?

It’s not only how do we assess the shorter tail lines, but I think more tricky and more difficult to manage in a way is what we do with the long tail lines.

It’s a lot of education. It’s a lot of understanding in terms of what the impact of inflation is. And then what is required for us to make sure that those inflationary trends are understood and the risks properly priced.  We have to have the ability to manage and decipher the issue from that perspective.

R&I: That’s a great response. I appreciate that. We also are hearing from some leaders, Ivan, that the talent issues that insurance faces is in some cases limiting the ability of underwriting groups to add new business or pursue opportunities. I just want to get your perspective on how much are you being impacted by talent shortages and if you do have a talent shortage issue, how much that impacts your appetite or your ability to execute on business?

IG: I think talent shortage might be too extreme of a phrase. I think that probably [the] majority of insurance companies are just dealing with, as I said before, how do we manage the transition from pandemic to endemic? And we’re having a full discussion, not only in insurance, but in the greater economy about the Great Resignation.

All of these are things that we’re all dealing with. Some of them might be more short term and some more transitional. From that perspective, I can tell you that we do have situations like anyone else where there’s certain teams a bit under pressure in terms of staffing levels.

But at the same time, I think that we, in some ways, benefit from the brand that we have and the ability for Swiss Re to bring talent from other parts of the industry. So it’s a lot of work around onboarding, a lot of work around training. I am assuming that in that context, there will still be opportunities for us to have people coming to our company and support our overall mission and vision.

R&I:  So you are currently CEO of North America, but you’re taking on a new role, are you not?

IG: I am. I’m going to be relocating to Beijing and taking over the CEO president role for our business in China.

R&I: Well, first of all, congratulations, that sounds like a very fascinating role that you’re taking on.

IG: Thank you.

R&I: I had a question about opportunities, and that’s why I asked about your role when you’ll be going to Beijing, but what market opportunities can you say that you’re most excited about as a leader? And of course, that would apply to China or North America.

IG: For now, related to North America, I think that there is still quite a lot of opportunities on the property side. I think that a big part of the market has struggled a bit to position Nat CAT. And there’s been some retrenchment of Nat CAT capacity by a number of players.

We tend to believe that we were a bit ahead of that curve in the sense that around two years ago, we started to be very vocal about the need to either reduce or have properly priced what we call the secondary referrals in Nat CAT.

I think in that context, we have positioned our portfolio in a way that today, we have plenty of Nat CAT capacity, which is priced at the right level. I think we’re going to be very comfortable to deploy. So that’s one that we can see with quite a good kind of level of interest.

We also see in the context of international programs, the ability for us to bring something new to the market. Not only is there a large pool in terms of multinational companies that require coverage around the world, but it is also one that you have more and more mid-corporate expanding operations.

In that context, basically transitioning to international programs. And I think that creates a secular growth trend and we’re very keen on developing that.

The third one is related to innovation, parametric solutions specifically, but not limited to that. We feel that as risk managers deal with more complex kinds of risk landscapes, they need certain specific products that might be a bit different from what they’ve built in the past. We have the ability to tailor make a lot of solutions.

The last one is on the accident and health side.  I think that there’s more and more corporates moving to self-funding plans. And in that context, I think we also have the ability to support them, not only with traditional products, but also some innovative products in association with a partnership that we announced around two years ago now with Verily Life Sciences, which is [a] subsidiary of Alphabet.

So those four, I think will give you a pretty good idea of the areas that we are focusing on at the moment.

R&I: Ivan, thank you very much for that. Appreciate that specificity. Now my last question, was there anything you were thinking about that you want to get across to our readers that we didn’t ask you about?

IG: Maybe there’s one topic just because it was so prominent these weeks and in the last couple of months, and you probably have a view on this one as well, but that it appears that it doesn’t go a week without one MGA being announced or formed.

Basically, it’s about the capital that’s moving into the MGA space.

I think in many ways when we analyze the overall situation and we see some of the benefits that MGAs can bring to the market in terms of maybe a more specialized approach or a more niche area of development, it is by and large beneficial.

When you see what’s happening in the market today, and this is not the first cycle of MGA expansion, we’ve seen some in the past as well. The concern is that you end up having a pretty commoditized MGA market, which defies a bit the logic of why MGAs exist.

The concern is that a number of these MGAs over a period of time will really not add any benefit to the industry. They will probably not make enough progress and end up creating more disruption on the negative side. So that’s just my one observation of market-specific trends and maybe something that would be interesting for your readers as well.

R&I: Ivan, thank you so much. I’m sorry we couldn’t meet face to face, but again, congratulations on your new position. I’m sure it’s going to be a pretty dynamic time for you.

IG: Thank you so much. I appreciate it. &

Dan Reynolds is editor-in-chief of Risk & Insurance. He can be reached at [email protected].

More from Risk & Insurance