Significant change is on the horizon for the insurance industry.
Even before the uncertainties and unknowns of the novel COVID-19 pandemic, the industry was already gearing up for a hardening market in many lines. With less available capacity and higher premiums, many are looking toward the future with an eye on alternative risk transfer solutions.
“We’re really paying attention to that right now because of the hardening market,” said Allen Kwan, head of customer management for North America, Swiss Re Corporate Solutions (SRCS).
Climate change, natural catastrophes, civil unrest, the pandemic and more. Each have played their part in how business is conducted and, subsequently, how insurance responds.
“There’s been change in capacity. People are looking to protect against these potential risks, and they know that won’t be through soft market solutions,” Kwan said.
Added Dan Combes, head of distribution management for North America at SRCS, “The pandemic, coupled with Nat Cats from the last three years, has really opened the eyes of many clients. They know they need to address the protection gaps, whether through tech innovation or alternative risk solutions. Insurance has to be able to respond and work in this current environment.”
The industry is becoming ever more digitized thanks to a steady growth in technology and data. Clients are also looking to partner with insurers that have an understanding of their risk profile in these changing times. They want to get the best added value possible from their insurance partners, and for many, that’s about addressing the customer experience.
Kwan and Combes believe these two areas — technology and customer experience — are going to have an impact on how clients look for alternative risk solutions moving forward, further shaping the future of insurance.
The adoption of technology in insurance is no longer in the abstract. Data collection, machine learning, blockchain — each have found a home in the industry.
“When you think of the history of risk and the data collected over time, there is so much added potential there to analyze and predict what might come next,” Kwan said.
Take climate change as an example. As a 150-year-old company, Swiss Re has 150 years’ worth of global Nat Cat data available to work with.
“Technology enables us to review that data quickly and can play an active role in predictive analysis,” said Kwan.
A review on storm velocities over time can show what a hurricane season might look like before disaster strikes, enabling companies in the area to build up a solid risk management plan in advance. Technological tools like precipitation or humidity sensors can continue to collect data in real time to provide further insight into what a future Nat Cat might look like.
“Tech puts us in the location, shows us what’s happened, predicts what might happen next, and then aids us in working toward innovative solutions to combat those risks,” Kwan said.
The client’s assets are at the forefront of decision making, giving a deeper understanding of how an event impacts the asset and helping insurance to respond with effective risk solutions.
In addition to predictive analysis, technology is also connecting insurers and insureds at the click of a button. Sharing relevant information in a matter of seconds can go a long way to not only build rapport with clients, but also enhance alternative risk transfer innovation.
“Being able to predict, uncover and use the tools available to us, and then sharing those tools with our trading partners has opened the door to better implementation of technology,” said Combes.
For him, technology is the way forward.
“Anticipating the market needs ahead of the competition, and providing our broker partners with solutions to address those efficiently, is critical in mitigating risk,” Combes said.
As the market hardens, corporations are looking at their insurance purchases in a different light.
Companies want to look at their risk financing with an ever-present mind on their budget and bottom line.
“Customers increasingly look to protect exposures that are less tangible,” Kwan said.
“Whether that means expanding earthquake insurance coverage to their employees through a parametric policy or protecting locations that have been vacant or shut down.”
The key to understanding the risks a client is looking to mitigate is building a true partnership that identifies and manages those pain points before it’s too late.
A good partnership with a focus on customer experience is looking at the client’s worst-case scenarios and building out a program to address those needs. Kwan added that a part of that custom-tailored program is the idea of sustainability.
“Risk managers have a job to do every day, and so, if we’re able to help them work out their risk profile and bring clarity to it, they can focus on building out the efficiencies and the capital management on their other parts of the profile,” he said.
“Being able to ensure that the customer feels good at the end of the day, that their risks are protected, is a win-win,” Combes added.
Clients will remember which insurer was able to look at the critical changes in the industry and respond with solutions moving forward that helped them succeed: “It’s full transparency. It’s not just price anymore. It’s more about risk coverage, what we’re supposed to be doing and the risks that have changed. That’s the experience,” said Combes.
As the insurance landscape starts to shift in the coming years, clients will be mindful of the best solutions to their growing exposures. Alternative risk transfer solutions are indeed out there but finding them shouldn’t be seen as a laborious task; having the right partner in place will provide clarity and set a client on the right path.
Swiss Re Corporate Solutions can help.
“Our innovative risk solutions team has really been involved as the market hardens. What’s made the team unique is their ability to stop, listen to what’s happening and take our innovative solutions and customize them to meet clients’ needs,” Kwan said.
“We have the processes in place that take into account customer experience. We have the technology platforms available for our clients to dig down deeper on their risks,” said Combes. “And we work with the client to understand those risks.”
Many of the solutions in play at Swiss Re Corporate Solutions stem from the company’s extensive research and thought leadership. They’ve put the work in to best serve clients and their appetite for risk.
“We’re not just a trading insurance company,” Kwan said. “We are working to make the world more resilient by providing these solutions and filling in the protection gap.”
To learn more, visit: https://corporatesolutions.swissre.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Swiss Re Corporate Solutions. The editorial staff of Risk & Insurance had no role in its preparation.