Swiss Re Corporate Solutions CEO calls for “more coordination” with brokers | Insurance Business America
It describes the most prevalent threat in the industry
insurance news
By Gia Snape
Greater alignment is needed between insurers and brokers to address some of the biggest challenges the insurance industry has ever faced and meet the needs of customers in a changing and uncertain risk landscape.
So says Kate McGrath (pictured), North America CEO at Swiss Re Corporate Solutions, the commercial insurance arm of the Swiss Re Group.
In an interview with Insurance Business, McGrath identified extreme climate-related weather events as the most prevalent risk at the moment.
“The external factors we face range from geopolitical and economic risks to climate regulation. “We continue to have difficult market conditions, with reduced capacity and reinsurers trying to recover their cost of capital,” she said.
“While no single factor is new to our industry, it is just a much quicker or accelerated pace at which it is coming our way and, more importantly, our customers.”
Capacity of reinsurers under pressure
These dynamics are putting pressure on the traditional risk model and forcing the industry to innovate to meet new challenges, she added.
“Climate is one of, if not the, greatest threat to the industry and our economy,” McGrath said. “What worries me is that a nominal fluctuation in the environment can lead to such an increase in the intensity and frequency of events.”
According to McGrath, there were approximately $102 billion in insured losses from natural catastrophes in North America in 2022, with Hurricane Ian being the costliest single event last year.
“It puts pressure on reinsurers as to what capabilities they can deploy to ensure they can deliver the returns and continue to serve their clients well into the future,” the CEO continued. “At Swiss Re we are very focused on developing and finding solutions that our clients can respond to [climate risks].”
“If we can promote our customers, the entire industry will be promoted.”
Strong alignment across the insurance value chain is essential, especially when it comes to eliminating inefficiencies. Increased agility allows companies to better share technology and data, two things McGrath sees as “key factors” for success.
“While we are very much in agreement on this issue [with brokers]”I just don’t think we work together enough,” she said. “From filing a risk to issuing a policy, there are vulnerabilities.
“I’ve been in insurance for almost 30 years,” McGrath continued. “I was impressed by how the industry was able to react. I think my only disappointment is the speed with which we are reacting in this environment.”
Collaboration, particularly in data and technology, is an area that brokers and insurers should focus on.
“We have to react faster on behalf of our customers. There just needs to be more collaboration and more digitization. We need to turn the tide and become less reactive and more pre-emptive as we want to work with our brokers to be a trusted advisor to our clients,” McGrath said.
“We really want the industry to collaborate across the value chain. If we can strengthen our customers, the entire industry will benefit as well.”
How does Swiss Re Corporate Solutions deal with climate risks and other challenges?
With difficult market conditions and volatility expected to continue, McGrath said Swiss Re Corporate Solutions is taking creative steps to ensure clients receive the protection they need.
The measures often require alternative risk solutions that are tailored to the specific needs of the individual company.
“The talks typically result in a combination of a captive and an integrated risk program. It allows the corporate client to determine the level of risk they wish to retain and the level of risk they wish to transfer,” she said.
“When it comes to the appetite for frequency or the appetite for real heaviness and volatility, every balance sheet is a little different. So it’s very, very important for us to really work with our customers to find out what that appetite is.”
McGrath and her team also use parametric solutions to help fill gaps in a customer’s coverage.
“The three most interesting things about [parametric solutions] are that it is completely straightforward and transparent and there are no direct losses involved,” she said.
In front of an uncertain future
Whatever the future holds for Swiss Re Corporate Solutions and its clients, McGrath is confident that the hard work they have put in over the past few years has successfully protected them against unexpected risks.
“More than three years ago, our focus was on putting ourselves in a better position to respond to uncertain conditions. “The transformation we undertook a few years ago has allowed us to be in a stronger financial position,” the CEO told Insurance Business. “Now we are going into 2023 to be able to react faster and better for our customers.
“When I think about it, what we must continue to do is really work directly with our partners and customers to respond to these conditions and allow our businesses more control over their risk, resilience and destiny.”
Do you agree with McGrath’s view of the risk landscape? Share your thoughts with us below.
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