2020’s the Year for Insurance to Be Bold: This CEO Wants to Advance Corporate Insurance by Bringing More Partnership to the Industry

Andreas Berger, Swiss Re Corporate Solutions’ CEO, details the industry’s challenges and the necessary changes to solve them.
By: | February 5, 2020

It is no news that the global insurance industry faces a number of challenges: a persistently high expense ratio, unreliable underwriting profit, lumbering legacy IT systems, inconsistent customer service, limited product innovation and a business model that just isn’t adapting well to the era of technology.

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Last year, Swiss Re Corporate Solutions made drastic changes to its existing lines of business that reflect a fundamental belief that the old playbook must be rewritten, rather than simply revised, for insurers to be profitable and achieve sustainable success.

Risk & Insurance® spoke with Andreas Berger, Swiss Re Corporate Solutions’ CEO, about the industry’s challenging environment and how his organization plans to thrive in it.

There has been some hardening across multiple lines of business over the past year. What will these rate increases mean to the health of the insurance industry in 2020?

I think talking about a hard market versus a soft market is not the right discussion at the moment. There is no “one cycle motion;” there are many granular cycles.

Some markets will see significant increases while others will experience decreases. That’s the new normal. That’s why I don’t get carried away by rate increases; instead I like to address the existing inefficiencies in our industry.

If we don’t address these inefficiencies or change structurally, we’ll get hit in the future, hard market or not. We have to be decisive now, be courageous and bold. We need to find new solutions to old problems as the way the industry operates now is not sustainable.

However, a hardening market brings emphasis back to risk management. For too long, it was just about getting coverage for the best price. As capacity was readily available, risk management perhaps wasn’t as vital to the bottom line. Now, there’s great incentive for insurers to become more proactive about identifying, quantifying and mitigating exposures so they can develop innovative and more sophisticated risk management products.

What are some examples of the inefficiencies in the industry?

For one thing, the expense ratio is way too high in our industry, and that can be attributed to a number of factors. Technology, or lack thereof, is one of them.

Because many large carriers are saddled with legacy IT systems, it’s challenging to implement modern business platforms seamlessly.

We end up working on patchwork solutions and having to deal with multiple systems that create administrative burdens and expenses. As we need to get leaner in our processes, it requires scrapping those old systems and starting from scratch.

Inefficiency is also driven by the lack of granular underwriting. We can’t necessarily rely on investment portfolios anymore, so we have to improve our underwriting profitability.

That requires gathering data that will help us to better understand our own exposures, become more selective with risk underwriting and develop more accurate pricing.

These inefficiencies have also contributed to poor customer experience. Customers have a right to have a well-functioning corporate insurance industry, and that’s not happening right now.

How does Swiss Re Corporate Solutions plan to address these inefficiencies?

We’re approaching these topics from different perspectives: We need to improve our customer experience management, implement technology-based solutions and develop even stronger risk expertise. All three are intertwined in an effort to make our customers, and the world, more resilient.

We’re also transforming ourselves into a customer-focused organization by removing as much friction as possible from clients’ interactions with us and the industry. It’s about making processes simpler, streamlined and nimble.

One way we’ve done that is by developing a state-of-the-art, cloud-based, multinational insurance program management solution that allows everyone — including customers, brokers and underwriters — to work on one platform.

It doesn’t make sense for every insurance company to build their own system as the processes should actually all be the same. Moreover, the products are similar, so why should every company need to develop its own system? That’s why we made it part of our mission to open our platform, to share it with our industry partners. In today’s world we need to work together to benefit the industry as a whole.

Lastly, we leverage our extensive risk knowledge capabilities — both within CorSo and the broader Swiss Re Group — to develop innovative solutions for our customers. This includes offerings like parametric products, multi-line and multi-year, captive solutions as well as unique offerings for credit and weather.

Have any industry partners taken interest in the platform?

We just announced the development of a dedicated business platform for the global Brokerslink network.

Brokerslink was searching for software to help it manage its increasingly complex international business. It looked at our platform and said, “That’s exactly what we need.” Right now, we’re customizing our platform for Brokerslink and its partners in over 110 countries. More than 4,500 individual brokers will be able to work with it in the future.

We’re currently running tests with other insurers in a lab environment, where they can experience the full functionality of the platform and see what works for them. Together, we’ll customize it to meet their needs and requirements.

How does your investment in technology relate to your strategy of developing risk expertise?

As part of that effort, we’re deploying data and modeling capabilities to better understand our own exposure and to be much more selective about the exposures we take onto our balance sheets.

Carriers can no longer sustain loss-making portfolios. Being selective encourages insurers to invest more in their risk mitigation and drive down their losses, which is beneficial for the whole industry.

How do the structural changes announced by Swiss Re Corporate Solutions in 2019 align with this new approach?

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The structural changes followed our decision to exit unprofitable lines of business and really focus where we can make a difference in the market. We also wanted our set-up to better support our emphasis on innovation, digital transformation and the customer experience.

As a result, we appointed our first ever Chief Innovation & Transformation Officer and our first Head of Customer Experience. We’ll continue to invest in these areas as we build for the future. Because together with our industry partners, we aspire to advance corporate insurance.

Of course, to do that, we need the right people. We already have great talents at Swiss Re, and we’re also bringing in fresh perspectives and new competencies. We aim to increase our diversity factor because our industry demands a broad talent base, from underwriters to actuaries, computer programmers to data scientists, geologists to oceanographers.

While times are challenging, they also bring great development opportunities for those who want to be part of our Corporate Solutions journey. &

Katie Dwyer is a freelance editor and writer based out of Philadelphia. She can be reached at [email protected]

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The R&I Editorial Team can be reached at [email protected]