Protecting us against the financial fallout of COVID’s sequel: the reinsurance industry has its work cut out

A segue from public to private

“I was a bureaucrat,” said Henchoz, whose first job was as Energy Policy Advisor at the Federal Department of Economic Affairs in Bern. “I made my transition from the public to private sector in London with a policy-making role at EBRD (the European Bank for Reconstruction and Development).” The bank aims to change lives in Central & Eastern Europe by building sustainable and open market economies.

“I was on a trajectory leading me to a diplomatic career – you know, a World Bank/Regional Development Bank path. But I found the public sector too slow. And I was seeing the downsides of having a career where your nationality might count more than your credentials.

“So I had this exposure to the private sector in London and I liked it. But I had a generalist background, having studied Political Science. I therefore needed a change from an educational perspective,” he said, referring to his decision to embark on an MBA.

“And IMD was great in that it was small enough not to believe you’re just a number. Also, it was about ‘the how’ not ‘the what’. It was very practical, and there were lots of hands-on situations. It was highly relevant. Doing an IMD MBA, you experience your own limits and it teaches you to stay humble!”

‘COVID has made risk solutions generally easier to sell’

Henchoz recalls stressful times when COVID hit and as many short nights of sleep. However, he sees COVID as a huge opportunity for his industry:

“It marked an opportunity for a changed agenda, from a shareholder perspective, and made risk solutions easier to sell. It has created a level of urgency that wasn’t there two years ago.”

According to Swiss Re, today 75% of risks – from natural catastrophes and climate change, to ageing populations and cyber-crime – remain uninsured.

Business not as usual

Opportunities from COVID also come in part from changes to the finer details of “business interruption” in the insurance world as how exactly to claim it became the interest of many.

Take an event cancellation in 2020 as large as the Tokyo Olympics, whose insurance coverage Hannover Re was directly implicated in.

“There was a legal argument as to whether you can claim business interruption on insurance as most insurance policies are not supposed to cover a pandemic,” Henchoz explains.

“Credit insurance is another hot topic. As economies recover and governments reduce their support in companies, there might be a wave of bankruptcies and an increase in unemployment. We are currently looking at potential scenario outcomes from COVID and putting reserves aside for a case of claims because of credit defaults.”

Hannover Re is a very successful company, says Henchoz, adding that this doesn’t discount the pressing need to invest and refresh: “Technology change will bring new risk exposures, but also new opportunities to close protections gaps. Reinsurers will need to adapt by combining traditional underwriting skills with data analytics capabilities. Investing in new capabilities will be the name of the game for this industry to stay relevant.”