The protection gap and new technologies will generate long-term growth

  • Narrowing the existing protection gap by making more risks insurable will create significant growth potential for the re/insurance industry
  • New technologies will create additional opportunities but accumulation risks need to be better understood
  • Swiss Re engages with partners and clients to help make the industry "Future Ready"
  • Swiss Re expects price levels to stabilise

The current market environment is marked by low interest rates and the ongoing expansion of alternative capital. Volatility in High Growth Markets and the ongoing industry consolidation present additional challenges as well as opportunities. Looking ahead, new technologies are likely to disrupt the re/insurance industry and are expected to have an impact on all parts of the insurance value chain. This will be visible from underwriting to product delivery and how consumers will buy insurance in the future. At the same time many countries, companies and individuals are still underinsured for key risks, requiring an industry-wide effort to narrow the protection gap.

Michel M. Liès, Swiss Re Group CEO, says: " Let's focus on the fundamental question of how re/insurance can continue to create value amid many changing market conditions. The potential for economic losses from natural disasters and other risks are growing each year while the share of insurance is not increasing. Our industry has the capability and unique knowledge to assess and quantify the risks across so many areas of our everyday lives. Let's use this potential and expand the current reach of insurance by working together."

Generating growth through narrowing the protection gap
Economic development and ongoing urbanisation in highly risk exposed areas are two of the most important factors driving the growing demand for natural catastrophe capacity. Yet there is still a large proportion of the world' s assets that are significantly uninsured. Addressing this issue in all lines of business will be one of the biggest challenges going forward, but also one of the most significant areas of growth for the industry.

Technology a key driver of opportunity
The technological advances on the horizon have the potential to change and disrupt the entire insurance value chain. As technology changes the way people do business, travel and manage their health, it will also change how individuals assess their finances. Smart computing and mobile technologies are gaining trust with consumers and are influencing financial buying decisions. These will increasingly become the trend for buying decisions on insurance as well. Insurers have the chance to utilise technology to bring insurance closer to where people are – and in this way also help to narrow protection gaps in personal insurance lines.

In other insurance areas, technologies such as autonomous cars and their safety elements could make some motor insurance products obsolete over the next 20-30 years. In addition, underwriting models are likely to evolve based on big data and smart analytics. The revolution in cyber technologies, for example, has increased the risks from system malfunctions and cyber-attacks. For insurers there is a much higher likelihood that one event can have an impact across multiple lines of business in an insurer's portfolio. These accumulation risks, together with new risk pools created by technological changes, need to be better understood. Working together with clients and partners, Swiss Re aims to contribute to a "Future Ready" industry.

Christian Mumenthaler, CEO Reinsurance at Swiss Re, says: "Technology will create new risk pools and at the same time it changes the way we assess existing ones. We're already working today with our partners and clients to tackle these future challenges and opportunities."

On track with portfolio steering and risk selection
Smart portfolio steering and risk selection is key to Swiss Re's ability to continue delivering profitable financial returns. This requires a deep understanding of how relevant trends affect losses, exposures and premiums. Therefore, Swiss Re invests into research and development specific to each line of business. Using this research, Swiss Re supports its clients by assessing the risks of tomorrow.

Matt Weber, Swiss Re's Group Chief Underwriting Officer, says: "To get the right portfolio mix, we want to first understand loss, exposure and premium trends by portfolio segment. This then allows us to formulate an ambition for a future desired book of business and then to work toward achieving it. "

Price levels expected to stabilise
Looking ahead, Swiss Re expects price levels to stabilise across many lines of business. Over the long-term, demand for nat cat capacity is expected to continue to increase.

Notes to Editors

Swiss Re
The Swiss Re Group is a leading wholesale provider of reinsurance, insurance and other insurance-based forms of risk transfer. Dealing direct and working through brokers, its global client base consists of insurance companies, mid-to-large-sized corporations and public sector clients. From standard products to tailor-made coverage across all lines of business, Swiss Re deploys its capital strength, expertise and innovation power to enable the risk-taking upon which enterprise and progress in society depend. Founded in Zurich, Switzerland, in 1863, Swiss Re serves clients through a network of about 70 offices globally and is rated "AA-" by Standard & Poor's, "Aa3" by Moody's and "A+" by A.M. Best. Registered shares in the Swiss Re Group holding company, Swiss Re Ltd, are listed in accordance with the International Reporting Standard on the SIX Swiss Exchange and trade under the symbol SREN. For more information about Swiss Re Group, please visit: or follow us on Twitter @SwissRe.

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Cautionary note on forward-looking statements
Certain statements and illustrations contained herein are forward-looking. These statements (including as to plans, objectives, targets, and trends) and illustrations provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to a historical fact or current fact.

Forward-looking statements typically are identified by words or phrases such as “anticipate”, “assume”, “believe”, “continue”, “estimate”, “expect”, “foresee”, “intend”, “may increase”, “may fluctuate” and similar expressions, or by future or conditional verbs such as “will”, “should”, “would” and “could”. These forward-looking statements involve known and unknown risks, uncertainties and other factors, which may cause the Group’s actual results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects to be materially different from any future results of operations, financial condition, solvency ratios, capital or liquidity positions or prospects expressed or implied by such statements or cause Swiss Re to not achieve its published targets. Such factors include, among others:

  • instability affecting the global financial system and developments related thereto;
  • deterioration in global economic conditions;
  • the Group’s ability to maintain sufficient liquidity and access to capital markets, including sufficient liquidity to cover potential recapture of reinsurance agreements, early calls of debt or debt-like arrangements and collateral calls due to actual or perceived deterioration of the Group’s financial strength or otherwise;
  • the effect of market conditions, including the global equity and credit markets, and the level and volatility of equity prices, interest rates, credit spreads, currency values and other market indices, on the Group’s investment assets;
  • changes in the Group’s investment result as a result of changes in its investment policy or the changed composition of its investment assets, and the impact of the timing of any such changes relative to changes in market conditions;
  • uncertainties in valuing credit default swaps and other credit-related instruments;
  • possible inability to realise amounts on sales of securities on the Group’s balance sheet equivalent to their mark-to-market values recorded for accounting purposes;
  • the outcome of tax audits, the ability to realise tax loss carryforwards and the ability to realise deferred tax assets (including by reason of the mix of earnings in a jurisdiction or deemed change of control), which could negatively impact future earnings;
  • the possibility that the Group’s hedging arrangements may not be effective;
  • the lowering or loss of one of the financial strength or other ratings of one or more Swiss Re companies, and developments adversely affecting the Group’s ability to achieve improved ratings;
  • the cyclicality of the reinsurance industry;
  • uncertainties in estimating reserves;
  • uncertainties in estimating future claims for purposes of financial reporting, particularly with respect to large natural catastrophes, as significant uncertainties may be involved in estimating losses from such events and preliminary estimates may be subject to change as new information becomes available;
  • the frequency, severity and development of insured claim events;
  • acts of terrorism and acts of war;
  • mortality, morbidity and longevity experience;
  • policy renewal and lapse rates;
  • extraordinary events affecting the Group’s clients and other counterparties, such as bankruptcies, liquidations and other credit-related events;
  • current, pending and future legislation and regulation affecting the Group or its ceding companies and the interpretation of legislation or regulations;
  • legal actions or regulatory investigations or actions, including those in respect of industry requirements or business conduct rules of general applicability;
  • changes in accounting standards;
  • significant investments, acquisitions or dispositions, and any delays, unexpected costs or other issues experienced in connection with any such transactions;
  • changing levels of competition; and
  • operational factors, including the efficacy of risk management and other internal procedures in managing the foregoing risks.

These factors are not exhaustive. The Group operates in a continually changing environment and new risks emerge continually. Readers are cautioned not to place undue reliance on forward-looking statements. Swiss Re undertakes no obligation to publicly revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.

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