Ahead of Baden-Baden 2024 – what’s reshaping the specialty reinsurance market?
Ahead of Baden-Baden 2024 – what’s reshaping the specialty reinsurance market? | Insurance Business Canada
Reinsurance
Ahead of Baden-Baden 2024 – what’s reshaping the specialty reinsurance market?
Swiss Re head identifies three key trends
Reinsurance
By
Mia Wallace
During Swiss Re’s 2024 Baden-Baden media conference, specialists from across the business shared insights into what’s shaping today’s reinsurance marketplace – delivering updates on geopolitical risks, technology, the economic environment, natural catastrophes and societal risks.
Amid discussions about what’s happening in property and casualty – which can be expected to dominate discussions at the Baden-Baden Reinsurance Meeting – Jimmy Keime (pictured), head of engineering and nuclear at Swiss Re, delivered a timely snapshot of the key themes shaping the specialty reinsurance market today.
What’s top of the specialty reinsurance agenda?
“As the world continues to be faced with more geopolitical instability and economic uncertainty, we’re also seeing an increased demand in the specialty reinsurance space,” Keime said. “At Swiss Re we see three areas driving this specialty reinsurance demand in particular. One is credit & surety.” Keime noted that credit & surety serves as a stabilizer and facilitator of global trades, while coverage in this market helps to mitigate against increasing supply chain concerns.
The second core area is cyber. It’s a line of business where the long-term dynamics are clearly set to grow and which has a large protection gap, particularly among small- and medium-sized companies. However, he highlighted how systemic events in 2024, among them the CrowdStrike outage, have highlighted the importance of managing and pricing for cyber accumulation risks. “Swiss Re is doing its cyber portfolio in a controlled and future-oriented way,” he said. “We are committed to be in that space for the long term.”
As to what that commitment looks like, he shared that the organization has two important goals. One is working closely with its partners to help companies and societies advance their cyber resilience. The second is to ensure a sustainable cyber insurance market to cover growing protection needs.
The third key specialty topic for Swiss Re in 2024 is in engineering and construction. “It continues to be one of the areas where we see the most growth due to the large need of infrastructure investment that is required around the globe,” Keime said. “Global construction output is expected to grow by US$4.2 trillion over the next 15 years to US$13.9 trillion.
“You see that China, the US and India will lead that growth. They will represent 50% of the construction market growth in the next years. But in Europe as well, we see that the need is accentuated given the big push towards reindustrialization that we have seen after the COVID-19 pandemic, the energy crisis and also geopolitical tensions. That has made us realize how fragile some of our supply chains are, and how important it is to have local manufacturing to secure them.”
Digging deeper into the reindustrialization push being seen within Europe, he noted that when you look at that trend, it’s about reshoring and friendshoring. That trend is forecast to bring US$33 billion of premium over the next five years globally.
Renewable energy – and re/insuring the energy transition
Renewable energy is also a major topic, he said, and part of that conversation is around green energy with investments in renewable energy projected to represent a magnitude of more than $200 billion of insurance premium until 2035. However, it’s also important to note that the energy transition is another critical component of that conversation because the world still needs a lot of traditional energy resources to secure its energy supply.
Swiss Re has observed that a lot of the traditional risk landscape and risk profiles and exposures are evolving. And because of that, it is constantly investing into know-how, into wordings and innovative covers, into tracking and learning from claims, and into modeling.
“One recent example of this is the creation of the Center of Competence for Renewable Energy that we have at Swiss Re that acts as a knowledge hub for us and for our clients, so we can help them navigate this transition,” he said. “[It’s clear] that there is plenty of dynamism and new trends in the specialty space. So, we’re looking forward to exchanging with our clients during Baden-Baden, and we’re ready to support them to make the technical and evolving risks in the specialty risk landscape more manageable.”
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