Solutions for our clients
Innovation is not an isolated process at Swiss Re; it is integral to our daily work. Our commitment to accurate and timely identification of risk and our cooperative approach to product development – working with clients, brokers and partners to develop customised solutions – naturally generate innovation. A changing world constantly presents new risks and opportunities – our job is to anticipate, not just respond to them.
2008 saw a number of products and tailored solutions introduced for new and existing clients.
Extra Expense Protection
Our Aviation & Space team – whose global services comprise direct insurance, facultative reinsurance, proportional/non-proportional treaty reinsurance and alternative risk solutions – launched Extra Expense Protection (ExEP). The ExEP product protects our clients against the financial consequences of a major loss, such as a sudden increase in insurance premiums. Traditional aviation insurance markets tend to overreact following a catastrophic loss, resulting in such an increase the following year. An analysis of 20 of the largest losses over the past 13 years showed that the average premium increase was 79%. In addition to mitigating the additional cost burden following a catastrophic aviation event, ExEP protects our clients against hidden costs not covered by traditional insurance policies, including the use of emergency services, consequential losses and marketing/public relations efforts.
Title Insurance and Judicial Review Insurance
In response to the growing risk appetite of our clients in Europe and Asia, we adapted for local use two reinsurance offerings previously used in US and UK markets for underlying Title Insurance (TI) and Judicial Review Insurance (JRI) products.
The TI product covers losses arising from disputed real estate titles, while JRI provides cover for costs incurred when third-party action causes a municipality or other local government entity to revoke a building permit or change a zoning plan. This provides a cost-effective alternative to the more expensive financial guarantees that developers must often secure to get a project started. Ideally offered to clients through a quota share agreement, our reinsurance products provide additional capacity to cedents who adapt their TI and JRI products to enter new geographical markets.
Bancassurance
In Europe and Latin America we continued to offer our clients support with their bancassurance strategies – selling insurance products to consumers through traditional banks – via partnerships and complex, high-volume deals.
Parametric solutions
The past few years have seen increasing demand among clients for parametric solutions to natural catastrophe protection – that is, for policies that link cover to an agreed parameter of event intensity, rather than to individually assessed loss. A number of different teams at Swiss Re are involved in structuring and offering such products. This year, we introduced a parametric earthquake business interruption cover solution for corporate clients in Japan. The Japanese insurance market is mature, yet only 4–5% of companies have earthquake-related cover, despite their obvious vulnerability to business interruption. Such companies have found traditional cover difficult to obtain because of the complexity of risk assessment and measurement. Swiss Re’s new parametric product is based on the Shindo earthquake intensity scale. It features a highly transparent trigger point with the guarantee of a payout without delay, and is designed to enable customers to return to business quickly after an earthquake-related loss. In Italy, we secured an innovative placement for fire and earthquake covers. These protect real estate assets that serve as collateral for reverse mortgages sold by a leading financial institution. We also arranged a private variable annuity placement – the first of its kind in continental Europe – for a large Italian insurance company. In Bolivia, we joined with a local bank and a third-party software administrator to offer life insurance products in a market with low insurance penetration but significant growth potential. All these projects draw on Swiss Re’s expertise in providing unique solutions – from product design to policy wording – that span the divide between financial markets and insurance.
Agriculture
Our Environmental & Commodity Markets unit continues to generate innovative ideas in fields ranging from agricultural insurance to emissions trading and weather derivatives, effectively combining our global expertise with local market needs.
Our offerings are tailored to the needs of the various participants in the agricultural sector, ranging from suppliers, growers and traders to grain processors. About 80% of the agro policies sold in the US are revenue covers. Direct insurance companies risk high losses if policyholder revenues drop below 85% of the five-year average yield multiplied by the future crop prices in spring. To mitigate this risk, we developed a product with additional price risk protection for our clients.
