Monte Carlo 2014: Most innovation taking place on cusp of primary insurance and reinsurance, reinsurer says
Munich Re is expecting moderately increasing demand for reinsurance over the next three years, driven by growth markets and a greater need for innovative solutions to new risks.
The reinsurer said that in the highly developed markets of Europe and North America, which already have large premium volumes, it expects growth of 1% in each of the next three years.
In Asia-Pacific and Latin America, Munich Re forecasts growth of 3% and 4% respectively, but staring from a much lower level.
The company said the growth is being fuelled is being fuelled partly by increasing market penetration and rising values of material assets, particularly in emerging markets.
Reinsurance can also be used to help primary insurers to comply with capital requirements under Solvency II or similar supervisory regimes.
In addition, new risks emerging from technological or societal trends and increasing environmental and weather risks require continuous development of appropriate insurance solutions, Munich Re said.
The company said that most innovations are being developed on the borderline between primary insurance and reinsurance, where specialised know-how is combined with global risk competence.
For example, risks arising from the worldwide use of the internet require innovative insurance solutions. Enterprise risks, such as the financial impact on a company of an event causing reputational damage, can be covered within a clearly defined scope. Previously, such risks had been regarded as uninsurable.
Munich Re reinsurance chief executive Torsten Jeworrek said at the annual industry conference in Monte Carlo that “innovative insurance solutions in new areas are the key to long-term profitable growth.”