Welcome to the 2018 Global Insurance Forum

Welcome to the 54th IIS Global Insurance Forum. We are delighted to return to Berlin, as memories of exciting conferences here in 2007 and 1999 blend with anticipation of a stimulating 2018 event. We were honoured to accept the invitation of the German government and insurance industry to present our forum here, and in doing so wish to highlight the successful efforts both in fostering innovation, and in promoting resilience and market development.

Our delegates this year will participate in sessions focused on ‘The Innovation Transformation’ of the industry on days one and two. After welcoming remarks from the German government and insurance association, the agenda features a paired set of panels on the industry’s key issues, the first comprising leaders of today, the second featuring leaders of tomorrow. 

This symmetry of perspectives recognises that talented young executives are no longer expected just to learn from their elders, but have valuable ideas to offer right now, in our rapidly evolving business. Other innovation sessions include a provocative mix of non-life and life strategies, and a very special address by Insurance Hall of Fame laureate Shuzo Sumi of Tokio Marine.

Day three is devoted to the many ways the insurance industry promotes resilience and aids market development. It will feature an impressive roster of government, industry and international speakers.

The work of the InsuResilience Global Partnership will be highlighted and is, indeed, one of the key reasons we are here this year. The Insurance Development Forum (IDF) will also be prominent, as there have been important developments and increased momentum in IDF activity.

Public private partnerships in insurance in both developed economies and emerging markets will each get their own session. This dedicated resilience day will also offer working sessions for delegates to learn more about specific initiatives where their talents and interests may lie.

One should not merely attend a Global Insurance Forum, one should participate. With that in mind, we have rejuvenated our traditional discussion group programme to enhance the experience of exchanging ideas with your peers from around the world.

I urge you strongly to let your voice be heard there. We are confident that expert speakers, stimulating topics and the opportunity to network with representatives of all stakeholders in the insurance industry will be valuable and enjoyable for all of you.

Mike Morrissey
President and CEO, International Insurance Society

Berlin beckons

With all the disruption buffeting the world, insurance needs an immutable offering to withstand the lashings of change. Hence the bold theme to exchange banter in Berlin with ‘The Innovation Transformation’.

Innovation in ideas and beyond technology too. Don’t just get caught up with the power of technology. Yes, it is huge and can make processes and people more efficient and optimise marketing reach. But, as the entries to our 22nd Asia Insurance Industry Awards showed, there is a whole world of innovation being implemented in insurance without technology.

This could be a sad indictment that insurance has been so stolid and unchanging that it has lagged behind even non-tech developments – or it could be that insurance is so far ahead and in-sync with a human-centred society that it has moved beyond simply technology. You take your pick of where your company stands.

Believing in Berlin

But back to the message of today, as Berlin beckons with all its cutting-edge in change, the thrust is really how insurance can be responsive to the increasing demands that the economy and society expects of it. This is good news for insurance as it means that people are waking up to the power of what it can do. Insurers must themselves believe that they can deliver on the expectations.

Can they? As the risk landscape increases, insurers, being in the risk business, need to respond with covers for the new risks. Technology and the attendant cyber exposures have challenged insurers the most.

Cyber exposures are said to be three times more disastrous than natural calamities. So how can insurers show their expertise in the risk business? Are there products to cover any risk and offer peace of mind to the clients who want to be protected?

Of course there is a cover for anything but at what price? And insurance has worked, throughout time, through the law of averages. So if you start looking at individualised, customised risk, the whole industry will be rocked on its heels and the pricing will hit the roof.

As one banker recently moaned at the EAIC public forum, “Yes, you offer cyber cover but at such a high price with such limitations that it is un-buyable. I prefer to bear the risk myself with greater peace of mind.” A damning choice but, nonetheless, the reality that insurers have to face up to every day.

Brainstorming in Berlin

Hence the importance of brainstorming in Berlin: how to make the insurance offering so compelling that people will buy insurance as a no-brainer. We know it in our minds that this is the case, yet we can’t get this message across despite the army and brigades of distribution avenues in the real world and online.

Innovation transformation must go deep and beyond just the bravado of how high-tech and high-touch insurance is. CEOs in Berlin must look at the human-centred revolution in insurance, be it technology or otherwise.

Berlin agenda

The Berlin agenda is indeed ambitiously brave with its extensive spin touching on all the hot irons of the day: be it gender and diversity issues, digital and InsurTech and blockchain, nurturing talent, inclusive insurance and microinsurance, coping with natural disasters through the PPP and IDF and, most vitally, on the expanding duty of care.

Will the GIF leave Berlin in a high-speed Shinkansen/TGV/Bullet train with carriages of strategies and ideas to make insurance save the world, spread peace of mind and encourage more innovation in industry? The GIF is that once-a-year, not-to-be-missed chance insurance gets to do a global self-check on where it is heading.

Will Berlin once again let the wall come down and make the industry stand tall with great ideas to buffer the world through any innovation transformation?

What’s next for InsurTech? - The Asian view

This week in Berlin, we gather to discuss the Innovation Transformation. Most insurance companies have now come to accept the importance of digital and have sought to incorporate some form of InsurTech as support and enhancement for their operations. But is it sufficient to transform just by incorporating digital as a business support function? Here are some takeaways from Asia insurance executives.

The insurance industry is presently at the tail-end of the first phase of its transformation, having been focused on applying digital to create efficiencies and incremental improvements across the business over the last three years.

That approach, InsurTech Asia Association president George Kesselman said, has largely been regarded as a “safe bet” to allow insurers to strengthen their bottom line without upsetting traditional distribution channels and partners.

Next phase in digital transformation

But it is now clear that the next phase of transformation must and will see an acceleration of digitalisation and the creation of dedicated business functions that are focused on digital growth. He highlighted that “until that happens, digital will always be marginalised under a ‘cost centre’ label.”

The transformation agenda will be advanced only if digital is recognised as a business function in companies, and that such recognition “will just be a start”. He went on to predict that eventually, digital should and would become a “horizontal core” that is integrated across insurance operations to “touch every single aspect of the business in the very near future”.

Digital must be set apart

Allianz Asia Pacific head of digital and technology transformation Phoebe Lee said that, within her firm, digital had been set up as a separate core business function to enable its quick and agile operation to keep up with industry developments. “For us to meet the expectations of our new and existing customers, we recognise that digitalisation is a core component of our business. And we continue to develop and implement digital technology to engage in more meaningful ways with our customers.”

Independent of legacy

No stranger to driving the transformation agenda, Aviva Digital global chairman and Aviva Asia and FPI executive chairman Chris Wei explained Aviva’s “[realisation] early on, that if we want to make an impact, we have to take digital seriously.”

Accordingly, Aviva established its strategic digital activities as a separate business function, supported by a considerable annual investment of GBP100m ($140m) to implement its digital transformation. “Operationally, carving off digital as a business function of its own enables it to function under separate regulations, a unique culture, with a targeted focus on digital. An independent P&L also helps to foster a stronger sense of responsibility and financial discipline.”

Weave digital into organisational fabric
Great Eastern managing director of strategy and transformation Ryan Cheong offered a slightly different perspective to the growing prevalence of digitalisation in the insurance industry. While technology remains a key enabler for the company’s strategies, Great Eastern’s view on digital is not restricted purely to the introduction of “technology or InsurTech per se”. Instead, the insurer sees digital as an increasingly useful enabler, an “overarching banner to reshape the relationship between customers and insurance”, given that consumers today live a greater portion of their lives in the digital space.

When it comes to driving transformation, however, Mr Cheong noted such changes will undoubtedly require “a new DNA to be injected into the company”, and a paradigm shift in thinking. While it has been consistently investing in technology, Great Eastern aims to use a different mind-set and approach to using technology to solve problems.

The risks of change wrought by climate change

Even as we discuss the hot topics of InsurTech and innovation, resilience and climate change are an essential part of the insurance conversation today, at any major forum like the GIF. Munich Re global head of climate and public sector business development Ernst Rauch takes us away from the bits and bytes of the moment to ponder what climate change may bring.

Climate change is altering the risk probability and impact of weather-related natural disasters. The global data on natural disasters that Munich Re experts have been collecting for more than 40 years clearly shows that certain meteorological events in some regions have been increasing in frequency and/or scale for a number of years now.

This trend will continue as climate change advances. Even the measures set out in the final agreement of the 2015 World Climate Conference in Paris will be unable to reverse these loss trends in the short or medium term.

Following major hurricanes, such as those that struck the USA and Caribbean in 2005 and 2012, and most recently in 2017, the first question many people ask is whether climate change had a hand in these occurrences. There is more or less unanimous agreement among scientists that the current change in climate is primarily the result of human activity and that this change is influencing weather extremes like windstorms, hail, torrential rain and heatwaves.

But the interrelationships involved are extremely complex. Up to now, natural climate oscillations have had a much greater influence on weather disasters than climate change has – and the susceptibility of buildings and infrastructure is not a static parameter, but one that changes along with building regulations, materials and the quality of the construction work.

Some questions are still relatively easy to answer. For example:

Are there natural disasters that would not have occurred without climate change? No.

Can individual events be clearly attributed to global warming? No.

Is climate change even influencing earthquakes? No.

Climate research and claims data at ever-higher resolutions have led to a significantly better understanding of the changes in the loss drivers from natural disasters. Increasingly tight-knit meteorological and hydrological measurement networks and the rapid digitalisation of risk information are opening up entirely new possibilities in the field of data analytics, and consequently offering new approaches for more adequate pricing and selection of risks – based on an individual insurer's risk appetite.

It is highly probable that understanding the risk of change emanating from climate change will increasingly become an additional success factor for risk carriers.

Redefining insurance service

Across various industries, the bar has been raised on customer expectation and insurers are duly expanding their role beyond traditional insurance in order to deliver added value.

Source: Bain & Company

Berlin: Rest & relax

Currywurst

Rustle up some time after the conference to soak up the cool, creative vibe the German capital is known for.

Eat

Currywurst, a street snack of sausage topped with curry sauce, has a devoted following in Berlin. Curry Mitte (Torstrasse 122) and Curry 36 (Mehringdamm 36) come highly recommended. Berliners are so serious about their currywurst that there’s even a Currywurst Museum (Schuetzenstrasse 70).

Drink

Track down Brauhaus Lemke (Dircksenstrasse 143) or Hofbrau (Karl-Liebknecht-Str 30) for the classic beer-hall experience. Sample a range of home-brewed beer and quintessential grub like pork knuckle and bratwurst.

Shop

Bitten by the shopping bug? Head on to Weinmeisterstrasse for the best high-street stores and indie boutiques. The hip Neue Schonhauser Strasse is a haven for funky, offbeat stores.

See

Kindl – Centre for Contemporary Art (Am Sudhaus 3), housed in a three-storey former brewery, displays some of the best works from emerging artists. And although street art is everywhere in Berlin, it’s worth exploring hipster neighbourhood Kreuzberg for its alternative scene and counterculture.

Pergamon Museum

If you have more time on your hands, check out the five museums on Museum Island, a UNESCO World Heritage Site. The Pergamon Museum has a collection of the Ancient Near East and Islamic art; the Neues Museum holds Egyptian, prehistoric and classical artefacts, while the Bode Museum has an outstanding sculpture collection. The Alte National Gallery displays neoclassical paintings and fine art while the highlight at the Altes Museum is the collection of Etruscan art, the largest outside Italy.