International programmes is a fast-growing sector for Swiss Re Corporate Solutions. The division's Emea and Apac leader Reto Collenberg tells David Walker about the opportunities and challenges involved
As Covid disruption recedes, borders reopen and supply chains and global trade sputter back to life, it is natural for trans-national businesses to look anew at insuring their international risks.
And global insurers are focusing on how best to help their global corporate clients do that.
Europe's re/insurance industry already covers risks in every corner of the globe, of course. When 140 groups in the EEA named just their five most prolific foreign markets in 2021 - as part of Solvency II reporting - that list had 64 different countries for non-life business, from Angola to the US, and 62 countries from Montenegro to the UK, for life premiums.
Some insurance groups are adding exposures to far-flung lands off their own bat, but some do so in concert with corporate clients that are busily expanding their own horizons.
International programmes are "probably the most complex business you can do"
This latter dynamic occurs in "international programmes", a $50bn global insurance market, by estimates consultancy EY published last May.
About half those premiums are from US clients. EY says this helps AIG command over 20% global share, and Chubb and Zurich each hold 15% positions, for example.
The UK, France and Germany together account for another $9bn odd of the gross written premium (GWP), from players such as Allianz, RSA, Axa XL and the corporate solutions insurance arm of Swiss Re.
International programmes are "probably the most complex business you can do" as an insurer, according to Reto Collenberg, head of international programs Apac & Emea at Swiss Re Corporate Solutions, "and entry hurdles are very high".
"There are several countries, often with larger accounts in need of often more than 50 local policies involved, with different regulation and market specifics to deal with," and cultural issues to consider as well. But the opportunities available for underwriters are significant, given "most companies in Europe probably have a subsidiary outside their home country."
Collenberg's statements seem to be validated by EY's estimate that the programmes of tier 1 players alone involve in the order of 260,000 local policies, and the fact that onboarding a big client can take one or two years.
Not all take so long, though, as is implied by the fact Swiss Re has more than 450 international programmes in its book, after just four years' involvement.
Being a relative newcomer has its advantages. "We believe we are coming in with fresh ideas. We invested heavily in our system landscape – which we built from scratch – and see the payoff of operating on state-of-the-art technology," Collenberg says.
Its most recent development in international programmes, announced last week, was a collaboration with Austrian insurer Uniqa. Swiss Re is helping Uniqa to manage and structure
international programmes through its digital platform. Policies on the Swiss Re Network will be pooled centrally, and ceded back to Uniqa in single reinsurance transactions.
Olivera Böhm-Rybak, chief corporate & affinity business officer of Uniqa, said the collaboration put it "in a great position to support our corporate customers on a global level while at the same time taking a big step towards the digitalisation of our processes."
Looking forward, Collenberg sees Asian businesses as a source of growth in Swiss Re's international programmes.
"Many technology companies are based in Apac, and they feed the world - so if they cannot deliver, it will impact the whole world"
Asia contributes about 20% of international programmes' GWP globally, and Collenberg expects in the long term Asian clients could potentially be up to half of Swiss Re's international programme's premiums. At present about 80% are EMEA and US.
"For example, many technology companies are based in Apac, and they feed the world - so if they cannot deliver, it will impact the whole world."
Japan and Taiwan are hotbeds for semiconductor manufacture but are also at high risk from earthquake and typhoon. Satisfying their demand for supply chain insurance can be challenging, but Swiss Re is offering parametric solutions in combination with an international programme to reduce the gap.
Another challenge that providers of international programmes face is consistency of underwriting data.
"Clients work with different data sources and Excel sheets. These Excel files are uploaded to carrier and broker systems, just to be again downloaded into Excel sheets and shared with other parties. Our vision is to achieve a data exchange between all parties, one on which clients, carriers and brokers work together on the same dataset," Collenberg explains.
"This is the key to enable true efficiency in the process. It is doable if the big players get together and sort it out. From a technical point of view the systems are there, so it is possible."
Swiss Re Corporate Solutions is actively providing this kind of platform to clients, carriers and brokers, but also cooperating with other carriers and clients to enable true end-to-end data exchange.
"One difficulty of international programmes is they are very cost-intensive"
The nascent plan, now at the discussion stage, is to prove the concept for German clients, before tackling other countries.
Completing this project should ultimately provide "huge benefits" to customers, brokers and insurers alike, Collenberg adds. "One difficulty of international programmes is they are very cost-intensive, and the expense ratios can be high, and one reason for that is the data landscape is not where we need it to be."
He notes "promising signs" for the project, including interest from both clients and brokers, but while "everyone involved is willing and agrees that it should happen," he emphasises it takes time.
"It is a huge project to undertake, and we need to dedicate the time to it. While people will have to contribute the cost [of doing it], in the long term it will pay that back."
Collenberg relates this particularly also to the property line of business, where the market has to deal with large amounts of data.
"Such a dataset would include all of the buildings covered, furniture and BI [business interruption] values, and then risk information. It is very cumbersome to get it into the systems, but it is the basis of everything underwriters do, to calculate the risks, particularly natcat risks, with post codes, to know exactly what the exposures are from Australia to Florida, especially if a big entity has thousands of locations."
Master and local
International programmes can involve a writing a master policy in the jurisdiction of the client's headquarters that offers wider cover and higher limits than the local policies are able to. To achieve this, the master policy has Difference in Conditions (DIC) and Difference in Limits (DIL) clauses.
One issue that customers often face is that if claims are paid via the Master policy and not where they occur, tax and compliance issues arise as the client has to reimburse their subsidiaries internally.
"We mirror the master policy language into the local policies and with that avoid DIC/DIL loss payments. We call it ONE Form, and many of our new customers can now benefit from this product," Collenberg says.
All this is a lot to take on for an insurer just four years into its involvement in the market, with barely one twentieth the number of programmes of some of its more established rivals.
But while the volumes in Swiss Re's international programme may lag some of its peers, its ambition to grow its book at a pace that does not endanger service is evident – as is its willingness to help improve the system, to benefit all.