Global reinsurer seeks Asian spoils

A successful and well-functioning economy needs a solid and trustworthy insurance sector, and as economies across Asia advance, Swiss Re is placed to tap burgeoning demand

With Asia recognized as the world's fastest growing wealth region, reinsurer Swiss Re believes it is well placed to capitalize on the expanding economies in both North and Southeast Asia.

Singapore-based Jayne Plunkett is chief executive officer, Asia and a member of the Group Executive Committee at Swiss Re Asia.

She is responsible for running all facets of the business and leads 2297 employees in eight markets across Asia. 

Under her guidance, the Asian division of Swiss Re currently makes up about 25% of the Zurich-based firm's global business and it is growing steadily. She firmly has her eyes set on more growth.

"Our Asian business is growing all the time, and we have aspirations that it will contribute 30% of global revenue within the next few years," says Plunkett.

At least half of Swiss Re's global growth will come from Asia over the next five years, according to Plunkett.

"We won't make up 50% of the company revenues, but the principle progression for Swiss Re will most likely come from Asia," Plunkett adds.

Growing affluence driving insurance demand

Together with economic development, economies, especially in emerging Asia, are augmented by additional assets such as key infrastructure resources like bridges, roads, ports and commercial and industrial real estate. All of which need to be insured.

"I think if you look historically the last few years in mature markets, the growth is 2% for the insurance market, we're more than double that here in emerging markets, and of course in China you have a growth rate in the low teens," Plunkett says.

Plunkett points out the symbiotic relationship between economic growth and development and insurance.

"We know from all the studies we do of different markets, that the more insurance provides a safety net, the more economic development booms," she says, highlighting the growth enabling effect of the insurance sector.

As an example, the CEO cites China, a market where hundreds of millions of people have been lifted out of poverty over recent years. As a result, this burgeoning middle class has more money to spend on their quality of life, she points out.

"They're buying more things which means they should insure those things, but they're also looking after their families and protecting them," adds Plunkett.

But Asia is not a uniform market and Plunkett's firm has worked hard on calibrating its offering to match the demands of the heterogeneous marketplace.

One size does not fit all

Plunkett explains that her firm now has a long history of crafting products specifically tailored to the needs of Asian clients.

"I've long said you can't just take a product that works in some other market and fly it over and expect to sell it in Asia," Plunkett says.

"That's not how it works, our job in the insurance industry is to craft the products that respond to the different cultural values and sensitivities of the diverse countries," she adds.

With a flurry of large deals in the insurance space of late, the question arises whether Plunkett is considering a move into the market to buy and generate more scale?

"On acquisitions, we always look around and see what's happening, but we work through insurance companies, so mostly what we do is try to find ways to help them grow their businesses," she says.

Delivering on ethical pledges

Her firm remains dedicated to environmental, social and corporate governance (ESG) principles, Plunkett says.

She points out that the Swiss Re Chief Investment Office invests in companies with an ESG benchmark of BB or higher, and prioritizes investing in green bonds over normal bond issuance.

"We signed the Principles for Responsible Investment in 2007 and more than 95% of our asset managers are signatories to the UN Global Compact," Plunkett says.

"This means we operate in ways that, at a minimum, meet fundamental responsibilities in the areas of human rights, labour, environment and anti-corruption," she adds.

Swiss Re is keenly aware that is easy to talk the talk on matters to do with ESG, but has it walked the walk?

Despite the threat of losing business, last year the firm set a target not to insure the risk and to reduce its exposure to companies with more than 30% of thermal coal exposure.

Insurtech pipeline firmly in place

According to Plunkett, Swiss Re has embraced the insurtech challenge but is not shouting from the rooftops about their progress, preferring instead to work on implementing the throughputs in the business.

Plunkett explains that there are several moving parts to the Swiss Re tech strategy. The company is digitizing its internal value chain, reducing costs and improving operational efficiency.

They are also working with clients on developing tech tools to help customers improve their own competitiveness by implementing end-to-end insurance solutions. Currently the reinsurer is working with 15 different distributors on this.

Swiss Re's Magnum automatic underwriting system for insurance agents for example processes around 10 million applications per year, 80% of which are approved instantaneously. It has been installed about 1.6 million mobile devices, including a large number in China.

As for ongoing research and development, Plunkett points out Swiss Re currently own the most insurtech patents (50) including in payments and wealth management, according to a January 2019 report commissioned by the Zurich canton.

These patents are being developed across the globe, including in Asia, for solutions deployment at the appropriate time.

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