The top three challenges facing reinsurance underwriters today are too much supply versus demand, new technology and data, and cyber risk. That, according to Martin Neuhaus, Chief Underwriting Officer of the Reinsurance Division at Munich Re America.
Mr. Neuhaus says the oversupply of capital demands discipline from underwriters, and new technology and the amount of data now available require underwriters to be able to analyze that data. While the amount of data available is not new to personal lines carriers writing auto or homeowners, it is now penetrating the commercial and reinsurance market.
While the industry has made a lot of progress on cyber risk, Mr. Neuhaus is mindful that technology changes rapidly, and with sovereign states involved in hacking systems, it adds a political risk component to cyber risk.
Mr. Neuhaus sees drones as just another technology to underwrite and believes carriers will adapt to these innovations. Autonomous vehicles however, will be a “game-changer” for auto insurers. If losses go down and risks move from personal lines to a product liability risk, we will be talking about this for years to come.
According to Mr. Neuhaus, the terrorism risk has changed over the past 15 years. After 9-11, the industry prepared for large attacks impacting many lines of business, taking many lives and large impact on infrastructure. With many countries acting to protect society, we have seen more attacks on “softer” targets, such as the Boston Marathon, Brussels, and Paris. And while devastating to those impacted, the insurance industry is not impacted as greatly.
The “sharing economy” brings commercial exposures to personal lines. When a renter rents their apartment, that risk is not covered in the rental policy. The trend is not abating, so the industry needs to develop a solution. . Mr. Neuhaus notes that as resources are shared going forward, the premium base could ultimately be reduced.
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