Andreas Pollman

* Most countries of the world have begun the journey out of the cycle of the Covid-19 pandemic.

– What is your assessment of the effects of this pandemic on the insurance sector?

There is a very heterogenous picture of the current situation of the pandemic across the world and the region. The key downside risks are the success of the vaccinations process and mutations. Lockdowns were loosened in the middle of 2021 in many parts of the world and came back again in Q3 of the same year. The further course of the pandemic is unclear and it will not be possible to determine the true extent of the pandemic’s impact on the insurance sector for some time. The losses caused by the coronavirus and the economic downturn caused by the pandemic will have a significant short-term impact on Munich Re, too. For the reinsurance field of business, Munich Re now expects around €800m in COVID-19 losses in the whole of 2021, with around €600m ascribable to life and health reinsurance and about €200m to property-casualty reinsurance.

That said, the coronavirus has clearly demonstrated the value of insurance, and this is likely to open up good business opportunities to insurers in the medium and long term. We are optimistic about the future. Market conditions in primary insurance and reinsurance continue to develop favorably, global economic growth has gained speed.

* Competition is intense and its manifestations vary between prices, products and services…

– How do you look at the competition factor from its various aspects?

With the accelerating trend towards digital insurance offerings and sales, products have become easily comparable for customers, not only in terms of price but also in terms of attractiveness. The key point for success, in my view, is to understand the customers and their needs. Who exactly are you targeting with the product and what does this segment of potential customer value from you as a insurer?

When we speak about Telematics products for example, it may be the case that there are several similar products out in the market – but not all performing in the same way in terms of pick-up rate and profitability. Insurers need connected solutions across their organization – realizing the power of the data already available in order to offer a product that makes sense for customers. A good product with the right offering will find its way to reach the right customers.

* Cyber insurance has imposed itself as one of the most important insurances in the era of globalization and technology.

– How do you deal with this type of insurance, especially since it requires great financial capabilities and distinct technical and technical expertise?

Given the great economic significance of cyber risks, the demand for cyber insurance, which requires special expertise owing to the dynamic development of the risks, is increasing appreciably. The boost to digitalization triggered by the coronavirus lockdowns has led to a dramatic rise in cyber-attacks, which are also becoming increasingly sophisticated. Claims from so-called ransomware attacks have seen a particularly significant surge – a trend that is likely to continue. An analysis by AM Best determined that three quarters of all cyber claims in the USA in 2020 were attributable to ransomware attacks.

Given the rising number of losses, prices for cyber insurance have burgeoned, and risk carriers have limited their capacity. The demand for insurance and service solutions is huge, and many companies are concerned about the rise in cyber-attacks. At the same time, four out of five top managers interviewed in the first Global Cyber Risk and Insurance study conducted by Munich Re admitted that their companies had insufficient protection.

To do justice to the dynamics of the risk and constantly changing trends, Munich Re is further expanding its network and partnerships. Munich Re’s own expertise in modelling cyber risks is being honed further thanks to its access to data and technologies. In collaboration with clients, solutions are being drafted that go far beyond traditional approaches and comprise not only customized cyber coverage but also services to prevent and cope with attacks (also referred to as pre- and post-incident services). The inclusion in insurance covers of such consulting services geared to limiting losses is becoming increasingly important, particularly given the growing number of ransomware attacks. This will raise cyber security standards and make risks more insurable.

In addition, Munich Re is aiming to create a sustainable insurance market together with its clients on the basis of proportional participations. This strategy, which is founded in data, know-how and consistent risk management, has made Munich Re a leading cyber risk carrier.

* A number of insurance companies are adopting a policy of acquisition of technology companies to enhance their capabilities in this area.

– What is your comment?

– Do you support or adopt such a strategy?

There is a dynamic momentum in the field of digital transformation and making use of technology. Identifying future trends – as data analytics & algorithms – and engaging in risk partnerships on new technologies are at the heart of Munich Re’s strategy.

Data analytics and the use of algorithms harbour great potential for insurers: data-based algorithms help to optimize many processes – for instance, in the area of sales, customer interaction, and claims settlement and underwriting. Many processes can be accelerated and improved for the benefit of clients. The increasing use of machine-learning technology and artificial intelligence in business has also given rise to a dynamic market environment with many new fields of risk – and the need for novel insurance solutions.

For years, Munich Re has been investing in the know-how of its staff through establishing a data analytics curriculum, and by hiring digital talent in order to be able to exploit market opportunities through a sophisticated combination of insurance and data expertise.

The following are two examples of solutions already being employed in the market:

– The Insurance Analytics Platform enables insurers to collate their own data with sector-specific external data provided by Munich Re. Using far greater and more relevant data volumes provides the basis for enhanced portfolio management and smarter decision-making – from distribution and pricing to claims handling.

– Backed by its expertise in AI, Munich Re offers a unique cover called aiSure that guarantees the performance of algorithms. Munich Re provides advice to AI providers in designing their performance guarantees, relieves them of significant balance-sheet risks and thus makes them more attractive to investors and clients relying on the performance of algorithms.

To develop our own perspectives with such complex topics as artificial intelligence and quantum computing, Munich Re is working together with leading research institutions such as the German Research Centre for Artificial Intelligence (Deutsches Forschungszentrum für Künstliche Intelligenz; DFKI) and has recently set up the Quantum Technology & Application Consortium (QUTAC) together with nine leading German companies.

* How do you evaluate your company's business in the Middle East and North Africa regions in particular and in various countries of the world in general?

– Are there any new changes?

The MENA region remains an important and significant region for Munich Re. As regulators are introducing changes, mergers and acquisitions are happening, there is a lot of movement in our area. We will continue to engage with our business partners and work on innovative solutions, as new types of risk emerge.

One topic very close to Munich Re for 2022 and onward it is the topic of climate change. On 11 July 2021, eight of the world's leading re/insurers, including Munich Re, have founded the Net-Zero Insurance Alliance (NZIA) to accelerate the transition to a net-zero emissions economy. Members will individually set interim targets and will annually publicly and independently report their progress in helping to achieve the Paris Climate Agreement targets. Munich Re has already set itself ambitious decarbonization targets in December 2020, which underline our commitment to a climate transition