In less than a month, I'll be attending the RVS Monte Carlo reinsurance get together for the first time. Swiss Re's theme for this year is "We're future-ready", a nod at the changes that are transforming the re/insurance landscape, opening many new opportunities for those smart and fast enough to adapt their business models.
A key topic I expect lots of discussion around is the future of motor insurance. Compulsory in most markets and representing one third of non-life insurance premiums, motor insurance is a strategic product line for many P&C insurers across Europe. Motor business, like most liability lines, is a "social product" in the sense that new technology, economic dynamics, as well as the regulatory environment all play a major role in its future evolution. And that future is arriving as fast as the technologies underpinning motor-related products and services emerge. Because at the core of motor insurance's underlying risk is the automotive industry, an industry that is undergoing deep transformation driven by technological advancements but also by consumers shifting from owning to sharing cars. With the advent of self-driving vehicles, changing commuter patterns, and vehicles shared by a massive number of drivers, the re/insurance industry needs to reexamine its business models and will, in the process, transform.
Looking at the insurance side of things, the low interest rate environment and the decrease in purchasing power of consumers will put pressure on the margins, further exacerbated by the heightening levels of compensation of bodily injury claims across Europe. Digitalization and more widespread use of aggregators have in some markets already caused fundamental changes in consumers' insurance buying behavior, price sensitivities, and brand loyalty, a phenomenon that will doubtlessly gain further momentum and spread to other European markets. Combined with regulatory tendencies to increase consumer rights to cancel or not automatically renew their policies, this will create a more fluid – and competitive – market, and insurers and reinsurers alike will see their playing field reshaped. Finally, big data and technologies like telematics will give insurers the opportunity to review and refine their products and pricing approaches. But they may have to combat obstacles both external – consumer concerns regarding data privacy – and internal – inadequacy of existing IT and analytics systems – in order to be able to fully capitalize on this new development. Who will anticipate, adapt and leverage these changes, seizing the opportunities these changes bring about? Who will win the automotive insurance race?
Working for a leading reinsurer like Swiss Re means a lot of my job consists in analysing future motor insurance scenarios, constantly challenging myself to develop products that best protect insurers' results, capital position, and/or accelerate growth. As I prepare to head to Monte Carlo, I hope a lot of our conversations will also focus on how Swiss Re can play a bigger role in my clients' transformation process. By sharing our expertise, resources, and the capabilities we have developed over the years on topics such as telematics, driverless cars, or big data, we can partner to confidently face the future together.
In your view, what are the key game changers of the motor insurance business? How do you think the industry should evolve accordingly?
I look forward to discussing these exciting future trends and challenges at Monte Carlo and beyond.