NEWS
Hannover Re sees no renewals surprises but worries on geopolitical events
A consistent perspective on risks and capital allocation are key to growth.
Hannover Re is optimistic about the renewal season, anticipating “no surprises, we hope” and discipline in line with this year’s 1/4 and 1/7 renewals. But Sharon Ooi, an executive board member at the reinsurer, does have some concerns, including geopolitical tensions and their potential impact on Asia.
“You have to be cognisant around the geopolitical tensions we’re seeing globally. The wars that have erupted will always have ongoing repercussions that can impact the Asia-Pacific markets as well,” she warned, speaking to SIRC Today.
The road ahead has other potential challenges. Inflation, for instance, remains a significant concern, Ooi said.
“Core inflation is higher now than the pre-COVID-19 averages in many Asia-Pacific markets. The issues and situation haven’t changed much. This needs to be factored into our thought process, especially when assessing the expected impact on loss cost,” she added.
Ooi highlighted the issue of social inflation, especially in countries with active litigation funding. She stressed that the diversity of the Asia-Pacific market makes inflation a difficult topic to generalise around. It can be as relevant in mature markets such as Australia and Japan as in large emerging markets such as India and China.
“Inflation is an issue in India as much as it is in Australia, and the impact of secondary peril losses is an issue as much in India as in China. So for us, it’s about ensuring consistency in our views of the risks we’re taking on,” Ooi explained.
She touched upon other regional challenges, from insurance affordability, accessibility, the widening protection gap and increasing severity and frequency of secondary perils due to climate impact, to the transition to a carbon-neutral economy and the shift to IFRS17. The geopolitical landscape, marked by tensions and conflicts, can also have ripple effects on the Asia-Pacific markets.
“Asia is extremely diverse. The market conditions in each country differ significantly due to differences in regulatory frameworks, macroeconomic fundamentals in terms of GDP growth, and inflationary concerns,” Ooi observed.
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“It’s about ensuring consistency in our views of the risks we’re taking on.”
Sharon Ooi, Hannover Re
A three-year strategy
Transcending all these challenges is Hannover Re’s strategy in Asia-Pacific, which boils down to something very simple: profitable growth. As the company readies itself to roll out its next three-year strategy, Ooi provided a glimpse into its strategic approach.
In such a varied landscape as Asia, where markets range from mature to nascent, charting a course for sustainable growth requires adaptability and a laser-focused strategy. It’s about growth that can weather market volatilities and stand the test of time, Ooi said.
Her transition from Swiss Re to Hannover Re 10 months ago has been a deep dive into understanding the company’s core pillars: its culture, people, and overarching strategies. For a global reinsurer such as Hannover Re, staying attuned to the Asia-Pacific’s pulse is indispensable.
This makes Ooi’s role instrumental in ensuring the company is in sync with its regional clients, offering them a consistent perspective on risks, transparent communication, and a steady approach to capital allocation, she said.
Consistency, Ooi believes, is a significant value proposition for the company’s clients and what sets Hannover Re apart. “We are always clear about our appetite and consistent in our messaging. We closely monitor market dislocations or unexpected losses.
“If there are market dislocations, we see whether it fits within our appetite to continue to help our clients. Unexpected loss is always the bane of any reinsurer. You don’t want to incur a loss that you didn’t price for,” she explained.
“We have to be always systematic in reviewing our underwriting portfolio and our market shares as well as our risk appetite in each country and each line of business,” she added.
“We shouldn’t talk as much as we should listen.”
“In terms of the Asia-Pacific region, it has to be acknowledged that when we write in these markets, we contribute to Hannover Re’s group diversification.”
Ooi takes pride in Hannover Re’s empowerment of its regional leaders and underwriters. “We rely on very good underwriting judgement. It’s up to them and their underwriting judgement on where and how to venture into various countries,” she said.
Ooi can see a plethora of future opportunities for Hannover Re in the region. Technological advancements, governmental fiscal strategies, post-pandemic repercussions, and the global transition to a carbon-neutral economy all pave the way for growth.
“Lines of business such as credit, engineering, health, cyber, and renewables are all poised for growth,” she noted. Given current geopolitical concerns, areas such agriculture insurance and renewable energy sources will also continue to be important.
Proper partners
On her personal goals for the upcoming year, Ooi emphasises the importance of strengthening partnerships. “Beyond improving pricing, it’s crucial to enhance our partnership with our clients and broking partners in the region,” she said.
Discussing the 19th SIRC, Ooi champions the art of listening. “We shouldn’t talk as much as we should listen. It’s important to hear from our clients and broking partners and understand what’s important to them, not only with respect to the upcoming renewals but more importantly, what their short-term objectives are.
“If we talk about a real partnership, it’s how we can help our clients achieve their short-term goals and long-term objectives. So we will be going into the SIRC with open ears,” she concluded.
Main image: Shutterstock / Mirko Kuzmanovic