Higher property values, urbanisation and rising repair costs due to inflation are expected to drive demand for property (re)insurance, especially in areas with intensifying natural catastrophe risks, said Swiss Re.
In a statement, the global reinsurance giant said that as the insurance industry convenes for the start of the renewals at the Rendez-Vous de Septembre, growing demand for reinsurance protection to be a key topic of discussion. The conversation will also revolve around forward-looking risk assessment and capital management – as adequate risk views and volatility management are important requirements in the uncertain environment.
Swiss Re property and casualty reinsurance CEO Urs Baertschi said, "The key topics for the industry remain largely unchanged from last year, but the challenges have intensified, leading to higher demand. Faced with elevated natural catastrophe risks, economic uncertainty, and geopolitical instability, reinsurance is the natural way for insurers to protect themselves from outsized losses."
According to the Swiss Re Institute, 2023 was the fourth consecutive year with global insured losses from natural catastrophes above $100bn, and 2024 is heading in the same direction, with insured losses of $60bn in the first half of the year, 62% above the 10-year average.
Engineering and green energy
Swiss Re also sees growing demand for (re)insurance in engineering in line with the positive outlook for the construction industry, especially for renewable energy projects.
To support the green energy transition, Swiss Re launched a Centre of Competence for Renewable Energy in 2023 to support its clients with expertise and products in managing their renewable energy portfolios.
The cyber (re)insurance market is primed to continue its growth trajectory as awareness of both the frequency and sophistication of cyber attacks is increasing following several incidents this year. Here, the management of accumulation risk will be critical to allow efficient capital allocation.
Reliable risk assessment and effective volatility management
What insurers, corporates, and the public sector need from reinsurers goes beyond the core function of providing risk capacity. Modelling expertise to stay on top of the changing risk landscape, up-to-date assessments and management of exposures are becoming even more essential.
An important prerequisite for modelling improvements is the effective flow of data through the risk value chain. As perils arise or intensify – such as extreme weather, rising jury awards in the US, or cyber threats, accurate and timely data is essential to recalibrate models and provide forward-looking scenarios that enable risk-adequate pricing. To achieve this, an expert-led conversation across the insurance value chain will be essential.
Beyond risk transfer, insurers are turning to reinsurers for value-adding insights and solutions that can help them better understand and mitigate risk, unlock innovation, and improve performance. Capital and volatility management are further immediate concerns for insurers, especially given the current economic uncertainty. In this regard, structured reinsurance solutions can provide protection to smooth out volatility and support growth plans by improving capital management efficiencies.
Swiss Re property and casualty reinsurance CUO Gianfranco Lot said, "To further progress as an industry, we need to leverage data better to predict future risk without being too anchored in the past. As a reinsurer we want to be a facilitator for our clients, helping them achieve greater precision to manage what's ahead of us."