Reinsurance broker Guy Carpenter kicks off 2019’s Baden-Baden Reinsurance Meeting by asking whether the sector is ready for the forces of the fourth industrial revolution – so-called Industry 4.0
Guy Carpenter’s Reinsurance Symposium in Baden-Baden has focused on emerging technologies transforming the risks being transferred by re/insurance – and whether the sector is ready.
The tech opportunities posed by Industry 4.0, otherwise known as the fourth industrial revolution, were the focus of the event in Germany for the Baden-Baden Reinsurance Meeting 2019.
New technologies are already “transforming radically” the characteristics of risks assumed by the re/insurance industry, as well as providing market opportunities, said James Nash, international CEO, Guy Carpenter, opening the event in Germany (pictured).
“The quantity and quality of data associated with Industry 4.0 should enable more precise underwriting,” said Nash.
“This brings huge opportunities to grow and innovate, as well as enhance risk understanding and increase efficiencies,” he continued.
“To exploit these opportunities fully, we need to offer comprehensive solutions that mitigate these new risks and create effective underwriting and distribution systems.”
Jon Hancock, director of performance management at Lloyd’s, spoke at the event, outlining what Lloyd’s was doing – under its Blueprint One – to move the market forward.
“Can we as an industry say that we have adopted technology and Industry 3.0 in the same way that many other industries have? I don’t think that we can,” Hancock warned.
Instead, an “enormous challenge” lies ahead, he cautioned.
“However, we have a massive opportunity to leapfrog the third industrial revolution and get ahead of the game by fully embracing the fourth industrial revolution,” Hancock said.
“At Lloyd’s, we are working to address this by setting out our Future at Lloyd’s program which provides a blueprint to make Lloyd’s the most advanced insurance marketplace in the world. Every marketplace and everyone in our industry should have a similar plan in place,” he added.
Karen White, CEO of catastrophe risk modeller RMS, focused on harnessing tech-driven innovation to meet the demands of the evolving risk lifecycle and to enhance value to customers.
“We’re at a pivotal moment,” White stressed.
“The dynamics of the risk market and our industry demand that we change and adapt while at the same time, technology has evolved so that it can be harnessed in new ways to drive change effectively.
“Fundamentally, tech-driven innovation is a key pillar to better manage the evolving risk life cycle and deliver greater value to customers, as we are hit with the impact of extreme weather, climate change, man-made disasters, a shift in value from tangible to intangible assets, emerging risks such as cyber, along with liability and litigation trends, to name a few,” continued White.
She added: “These kinds of market disruptions create new opportunities and open the door to new business models. The other side of that coin is that industry disruptions are often ruthlessly unkind to incumbents who don’t embrace change.”
Focusing on industry supply chains, Ian Branagan, group chief risk officer at RenaissanceRe, highlighted the potential technology offers to greatly enhance efficiency.
“The supply chain in our industry continues to be impeded by legacy inefficiencies, costs, duplication and poor integration,” he said.
“There is great potential for positive change if we look at the supply chain in a holistic manner and as an integrated system; harnessing technology to support simplification, less duplication, automation, cost-efficiency, and more streamlined distribution networks,” said Branagan.
Laurent Rousseau, deputy CEO of Scor Global P&C, considered aspects of the industry that would remain unchanged despite the period of rapid transformation.
“What is not going to change for reinsurers “is the need for greater sophistication and depth,” Rousseau said.
“When I see companies focusing purely on the transactional aspect of our business, in my view they are losing sight of what really makes a difference which is the ability to deliver our own in-depth view of risk.
“What is also not going to change is that clients will continue to demand better prices and faster delivery. We should approach what we do in a client-centric way and focus our value proposition fully on the needs of our clients,” he continued.
Nash added: “Industry 4.0 puts societies and economies on the cusp of one of the most significant periods of change, and we must work with capital providers to help understand how risks are likely to evolve so they have confidence in deploying their capital at acceptable risk parameters,” Nash added.