This has been my sixth summer living in Switzerland, and the first to be characterised by persistent rain and intermittent hail. Tragically, the resulting flooding across Western Europe claimed dozens of lives and caused immense damage to homes and businesses.
Climate change is clearly no longer some distant threat – it is a reality impacting people’s lives, livelihoods and property. And there are many other challenges too, from cyber attacks to the effect of the pandemic on mental health.
As we face these threats, risk pools are becoming larger and more impactful. For us as a reinsurer, this is an opportunity to focus on more inclusive, equitable access to insurance as a way of strengthening societal resilience. This means providing affordable insurance protection to more people and reaching the most vulnerable among them.
Working together, governments and insurers can collaborate to address the systemic reasons for underinsurance. To do so, we need to raise risk awareness to gain more customers while also prioritising the affordability and accessibility of insurance products.
Better awareness means better decisions
Understanding future threats is key to helping the world become better protected. Data-driven research, technology and data and knowledge sharing are essential.
When it comes to climate change, the Swiss Re Institute has been quantifying the future impact on property losses and premiums. According to its latest report, climate risks could increase insured property catastrophe losses by up to 120 percent in some major markets such as China, France, Germany and the UK by 2040. Globally, property catastrophe premiums could increase by up to 40 percent, or $168bn, over the same period due to climate change. Consumers need to be aware of this growing risk and their options to mitigate it.
Other trends that will fundamentally reshape future P&C risk pools include increased third-party litigation funding and the impact of technology on motor insurance. Technological and environmental concerns are likely to shift the balance of P&C portfolios from lower-risk motor to higher-risk property and liability lines, and global P&C premiums will double to an estimated $4.3trn by 2040. At the same time, greater digitalisation in an interconnected world will further heighten cyber risk.
Data and tech will drive affordability
Technology and data can help drive affordability by improving risk management as well as reducing operating and acquisition costs, which ultimately leads to lower premiums.
For example, advanced driver assistance systems (ADAS) have shown huge potential in bringing down the number of road accidents, fatalities and severe injuries. Swiss Re, through its partnership with automotive technology leader Veoneer, is playing in this field, helping to accurately calculate insurance premiums for drivers of ADAS-enabled vehicles.
Innovation will boost accessibility
Finally, we can do more to reach new customers across different socioeconomic groups through new partnerships and solutions. Examples include female entrepreneurs having to look after their family and business in the event of ill health or healthcare workers in need of protection.
Swiss Re has been working with some governments during the pandemic to ensure frontline health professionals have access to health insurance to protect themselves and the healthcare systems they support.
It is by reaching out to new customers like these, with an affordable and accessible offering, that we can collectively overcome barriers to insurance and make the progress we all hope to see.
Future global shocks may be as unpredictable as the Swiss summer, but by promoting inclusive insurance and strengthening societal resilience we will be much better prepared – come rain or shine.