Reinsurance in Europe

In Europe, the German insurance industry association GDV estimates that there will be up to 5.5 billion euros ($6.5 billion) in claims from storms that brought catastrophic flooding to parts of the country, according to Reuters.

The revised estimate of between 4.5 billion and 5.5 billion euros is up from an initial estimate of 4 billion to 5 billion euros. Allianz, Germany’s biggest insurer, said in an early appraisal of the losses that it expects claims of more than 500 million euros from storm Bernd.

The flooding stretched from an area close to the western city of Cologne down to southern Bavaria, causing houses to collapse, stranding residents on rooftops, and sweeping away cars. At least 180 people were killed. This year is on course to be the most expensive year for insurers in Germany since 2002, when various storms caused 10.9 billion euros in claims, GDV said. About 40,000 vehicles were damaged or destroyed in the recent storms, it added.

Allianz said it had already received claims for about 10,000 homes and 3,000 vehicles and expects the figures to rise to 30,000 and 5,000, respectively. The company had 230 claims experts in the affected areas to assess damage. The insurance industry is in the midst of a radical, digital shake-up. Customers are turning to digital channels, and technologies such as the connected car, smart home solutions, and artificial intelligence (AI) which are bringing into play an era of new products built on data and analytics.

Emerging players such as Lemonade in the United States, Youse in Latin America, or Nexible in Europe now use digital applications such as chatbots to turn the process of buying a policy or filing a claim into a better experience. This approach is a huge step up from the days of the analogue processes of traditional insurers. It could be as transformational as the move from black and white to colour TV.

With new Insurtech competitors on the hunt for customers, incumbents must move quickly to integrate digital technologies into their operations. For the property and casualty (P&C) industry, digitising the claims’ function is a huge source of potential. To capture the value of digital, P&C claims functions must embark on a transformation to become a customer-centric, digitally enabled organisation that excels in the three foundational areas of claims – customer experience, efficiency, and effectiveness.

The run-off market is embracing those businesses that are unable, or unwilling, to write new business for whatever reasons – lack of profitability, non-core underwriting business in their portfolio, a new strategic vision, a really bad underwriting year (or years). Run-off has its own particular challenges, of course, not the least of which is the suspicion that legacy claims are not always administered as efficiently as they should be. This is probably unfair; however, perception is often reality. Reputation matters, especially for the end client, which is why a best of breed claims management system is more important than ever.

The worry is that due care and attention will not be paid to all claims and there are Watchdogs paying close attention. The global professional run-off firms do, of course, pay scrupulous attention to treating their customers fairly and have excellent people in place to ensure a smooth and orderly transition.

This is also where legacy claims management system technology can help demonstrate to auditors, regulators, policyholders and the media that a major investment in ClaimsTech is proof of a commitment to managing these claims efficiently.

Automated technology will consolidate MI in one place, improve transparency, reconcile payments, assist adjusters looking to commence negotiations and commutation discussions and offset outstanding balances with a long tail. It reduces painful and frictional manual intervention. The latest claims technology is hugely impressive when it comes to generating insights, analysing and leveraging claims reserve data, managing approvals, peer review and raising the visibility of a portfolio.

In our next blog in this series of Monte Carlo Rendezvous claims articles, we will be focusing on customer satisfaction.