How digitalisation will transform the risk and insurance industry

What do you see as the biggest risk concerns among your German clients?

Business interruptions including disruptions to supply chains are very important concerns in such an export-driven economy as Germany. Other relevant risks include negative market developments and the growing risk of protectionism. Cyber threats are also perceived in Germany as continuously growing, given ever-increasing levels of automation and the Internet of Things. Additionally, natural catastrophes and the growing threat of terrorism attacks are also top of mind for German clients.

What plans does XL Catlin have for the German market?

We want to continue to grow our footprint as a relevant partner to German mid-sized companies and large corporations across different industries.

As a leading provider of global programmes, we have the expertise and network to support our German clients around the globe, and we believe we are well positioned to expand our share of the market when it comes to new and complex risks and international exposures. XL Catlin currently participates in more than 3,500 global programmes around the world and leads over 70% of these. Following discussions with brokers and clients, we recently significantly increased our capacities for property as well as terrorism risks to meet clients’ increased demands.

What do you consider to be the biggest challenges facing the risk and insurance industry?

As digital transformation drives change across many different industries, one of the biggest challenges for insurers is to keep pace with the rapidly evolving business models and changing risk profiles of our clients. At XL Catlin, we see this as an opportunity to drive innovation and develop the solutions that our clients need. We know that risk managers are looking for insurance partners who understand how their businesses are changing, and who will truly add value by enabling the changes they need to drive forward.

If we take self-driving cars as one example, these vehicles can only become ‘normal’ traffic participants in the future if appropriate insurance models are available to address the resulting new risk landscape. This requires collaboration across different industries and public bodies, all of which play a part in enabling the safe, broad adoption of such autonomous technology. XL Catlin is the only insurer which is a member of the DRIVEN Consortium of companies, led by our artificial intelligence and mobile robotics software partner Oxbotica, which is running a ground-breaking project that will see a fleet of six connected and fully autonomous (Level 4) driverless cars capable of completing an end-to-end journey from London to Oxford in 2019. The project addresses some real-world challenges to the deployment of driverless vehicles, such as the availability of insurance, cyber-security and data privacy, to provide a proof-of-concept, and confirmation of the technology’s viability. XL Catlin is working with the consortium members to create a Situational Risk Matrix that will advise a vehicle on the appropriate level of autonomy to adopt, depending on its surroundings. The vehicles will use a real-time risk register to help better inform insurers, data which will in turn feed into insurance pricing models.

This is one of many innovation efforts we are driving to help our industry rise to the challenges of new risk landscapes.

How do you expect the role of the risk and insurance manager to evolve in future?

Risk and insurance managers will face an increasingly broader and very interesting role in the future. Their companies’ business models will change through the use of new technologies not only on the sales side, but also across their internal operations and processes – and in greater collaboration across different companies. As a result, the risk landscape will also transform and companies will need to understand and address the new risks posed by these technologies, which will be increasingly interconnected. They will also need to be a lot more data-driven and -literate, as business complexity increases.

At the same time, we believe that their expectations of their insurance partners will change, and rightly so. Take the rise of blockchain, for example. We are part of the insurance initiative ‘B3i’, as well as other blockchain initiatives which explore if and how distributed ledger technology could increase efficiencies in the exchange of data between (re)insurance parties. If this technology proves to be a viable tool, it could transform the (re)insurance industry through a shared, transparent record of contract-related information, enabling all parties to have an immutable audit trail underpinning end-to-end underwriting and claims governance. We believe that risk managers will expect their insurance partners to make use of all relevant technology and data sources for greater efficiency and collaboration.