The FINANCIAL -- The digitalisation of production processes, transport, logistics and big data is changing societies and economies across the world. These developments are also changing the risk landscape and insurers' business models. Munich Re is playing an active role in managing these changes with innovative insurance solutions, expanded services, and new approaches to business.
"Innovation is much more than digitalisation. We need to embrace not just technological changes, but also economic and social developments, and we must make the risks associated with them insurable," said Torsten Jeworrek, Member of Munich Re’s Board of Management. "So innovation is right at the top of our agenda." In recent years, Munich Re's operating field Risk Solutions has already greatly expanded its know-how-driven business. "With over €4bn in premium and a good combined ratio, this business has long been a source of stable income."
In conjunction with its customers and cooperation partners, Munich Re concentrates a lot of effort into analysing new or changed risks, and developing customised insurance solutions. Thomas Blunck, Member of Munich Re’s Board of Management, stressed: "Circumstances are changing quickly. We rely on partners and cooperation models to supplement our expertise." He said that with coverage for cyber risks, for example, cooperation with large IT providers is important.
"We often break new ground at product level, for example by insuring business interruption that does not involve any property damage. We want to develop more of this type of solution that extends the boundaries of insurability, and we want to develop them more quickly," said Blunck. In 2014, Munich Re was able to generate premium of around €400m with such innovative products. Blunck stressed: "We want to expand this business."
As regards traditional reinsurance business, Jeworrek explained: "Our capacity, expertise and customised service are in demand. At the same time, we maintain active cycle management and offer our capacity only where we are able to obtain risk-adequate prices, terms and conditions."
Most of the treaties in traditional reinsurance business are renewed each year as of 1 January. The Rendez-vous de Septembre in Monte Carlo marks the start of the annual renewal negotiations. There is still unrelenting competition in property-casualty reinsurance. The prices, terms and conditions for reinsurance cover are therefore under pressure across the board, albeit with decreasing intensity.