Swiss Re Insurance-Linked Fund Management

PCS - Emerging Risks, New Opportunities

Cross-sector cooperation key to underwriting new risks: Munich Re


As the world becomes increasingly complex and digitalised there is a need for insurance, reinsurance and ILS players to embrace cross-sector cooperation in order to create the products of the future, according to Munich Re.

Timed to coincide with the Baden-Baden reinsurance symposium meetings today, global reinsurer Munich Re discusses the need for companies in the re/insurance sector to look beyond it in order to find partnerships that can help with breaking into new categories of risk.

Munich Re is embracing this, developing relationships with clients or partners from outside of the re/insurance sector in order to develop new products to address the emerging classes of risk that digitalisation will create.

“In a fast-changing market environment, close client contacts are essential. We are also taking a new approach by way of cross-sector partnerships and cooperation initiatives,” explained Munich Re Board member Ludger Arnoldussen.

The insurance-linked securities (ILS) market could take a leaf from this book, both for ambitions to expand into new but already existing classes of risk, as well as when it comes to emerging risk categories such as cyber.

“Many new opportunities are accompanied by new risks,” Munich Re explains. The risk landscape is changing faster than ever before, with technological advances and digitalisation both making risk analysis easier as well as creating new risks or shifting liabilities from one party to another.

That needs a proactive response of engagement with those creating new technologies, or with those embedded in industries that are being disrupted by new technology, changes in demand and the evolving sales, purchase and payment funnel.

Alongside a focus on emerging technologies, this also requires insurers, reinsurers and ILS players to develop an understanding of customer experience, user needs and product design, in order to ensure that insights gleaned from industry are acted upon correctly.

Munich Re says that it has “further intensified cooperation with its clients and partners in order to find appropriate new insurance solutions,” with the first results of this cooperative approach already beginning to pay off.

Munich Re provides examples such as working with a company in Silicon Valley on data analysis for a pandemic cover for the Middle East Respiratory Syndrome (MERS) virus. With pandemic risk likely to end up in the capital markets, at least to a degree, ILS players should be open to partnering with firms that can help to make infectious diseases more understandable, perhaps resulting in parametric triggers that could be applied.

On cyber risk Munich Re has been working with software companies to better understand the risk. Here, ILS players could partner with providers of cyber security software in order to help them address the risks with penetration rates of their own products. That narrows the potential scenarios significantly, making structuring of re/insurance coverage for specific cyber tools much simpler, bringing the potential for capital market risk transfer forward.

It’s telling that one of the world’s leading reinsurance firms should choose to focus on its cooperative approach to gaining a better understanding of specific emerging risks as a key initiative.

It suggests that for forward thinking ILS fund managers, who would like to place their capital and capacity at the cutting edge of re/insurance coverage and the risk landscape, a similar approach of engagement with industries and experts is vital.

Artemis Live - ILS and reinsurance video interviews and podcastView all of our Artemis Live video interviews and subscribe to our podcast.

All of our Artemis Live insurance-linked securities (ILS), catastrophe bonds and reinsurance video content and video interviews can be accessed online.

Our Artemis Live podcast can be subscribed to using the typical podcast services providers, including Apple, Google, Spotify and more.

Print Friendly, PDF & Email

Artemis Newsletters and Email Alerts

Receive a regular weekly email newsletter update containing all the top news stories, deals and event information

  • This field is for validation purposes and should be left unchanged.

Receive alert notifications by email for every article from Artemis as it gets published.