Reinsurers commit to AI tools to improve efficiency, risk selection

MONTE CARLO, Monaco – Reinsurers say they are continuing to invest in and deploy technology, including tools supported by artificial intelligence, to allow them to do more things better and faster.

Technology developments are helping reinsurers better analyze data, model exposures, and bolster cyber defenses, they said during interviews and presentations at the Rendez-Vous de Septembre in Monte Carlo this week.

The reinsurance meeting is the traditional beginning of the year-end renewal season but is also the scene of general business discussions between industry participants.

Munich Reinsurance Co. is heavily committed to utilizing technology in its business, said Marcus Winter, CEO of Munich Re North America property/casualty.

“We use AI and data and analytics for our own underwriting, and we share that with our cedents,” he said. “We see that when we invest in technology to help ourselves make better decisions, those technologies are also very attractive to cedents. It helps with retentions.”

Everest Group Ltd. “absolutely” invests in technology, “particularly artificial intelligence,” said Sharry Tibbitt, Warren, New Jersey-based global head of property and deputy chief underwriting officer of the company’s reinsurance division.

“We’re using AI every day, and now we’re really looking into how we can correlate our investment in AI to loss costs,” rather than simply achieve process and operational efficiencies. “We’re really trying to use it to impact loss costs, and that will be the bigger investment.”

Improving the organization, labeling and storage of data helps reinsurers make better use of AI, Ms. Tibbitt said.

Technology, data and analytics are core to the insurance industry, said David Priebe, New York-based chairman of Guy Carpenter & Co. LLC.

“We invest deeply in data and analytics, risk modeling, risk scoring for all elements of our business. Now, we are increasingly looking at how AI can help improve the efficiency and effectiveness of our business,” he said.

“We do invest continuously into data and technology,” said Urs Baertschi, CEO of property/casualty reinsurance for Swiss Re Ltd. “We continue to invest in data and technology to allow us to be even more efficient and effective with our clients.”

The reinsurer has more than 200 proprietary models for natural catastrophes, which are updated to incorporate recent events and has 30 ongoing research and development partnerships, he said.

“There’s more technology available. There’s more data available,” said Stefan Golling, a member of the Board of Management of Munich Re responsible for global clients and North America. “With modern technology, we can also complement the data that we get from our clients. So yes, it is absolutely important,” he said.

Modeling capabilities are important for reinsurers, including modeling secondary perils, such as severe convective storms, said Thierry Léger, Paris-based CEO of Scor SE.

However, it will likely take several years before the models for secondary perils are at the same level as long-established hurricane models, said Jean-Paul Conoscente, New York-based CEO of Scor Global P&C.

Policyholders are also often partnering with insurers and reinsurers to improve their cyber defenses, said Manuel Arrive, Paris-based director in Fitch Ratings Inc.’s insurance group.

“All the measures taken by companies, encouraged by insurers and reinsurers, to mitigate the cyber threat is making progress, and the cooperation between insurers and companies is making progress,” Mr. Arrive said.

Mr. Golling of Munich Re stressed the importance of cyber accumulation modeling and cited the recent CrowdStrike incident, where issues at a third-party cyber security provider had far-reaching effects, as an example.

“The CrowdStrike incident is a typical exposure that we as an industry can cover and are willing to cover. It was a large-scale outage or incident with an IT service provider causing widespread business interruption,” he said.

The insurance industry is also employing newly developed tools to help collect information.

Helsinki-based Iceye OY uses 38 custom-built satellites to help insurers, reinsurers, brokers and others to observe natural catastrophes in near real-time, said Stephen Lathrope, London-based senior vice president for solutions.

The satellites, which the company began launching in 2018, use synthetic aperture radar, a radar imaging technology, that Iceye combines with available ground data to produce its natural catastrophe reports, he said.

Iceye announced last week that it was expanding its relationship with Aon PLC, which it began in Japan, to a global collaboration.

Insurance industry companies are also using CyberCube Inc.’s models to help “quantify and mitigate” cyber exposures, said John Laux, Asheville, North Carolina-based vice president of analytics.

CyberCube was the lead modeler on three of the four initial SEC type 144A cyber insurance-linked securities, or cyber CAT Bonds, issued in 2023, Mr. Laux said, adding that he expects further growth in the sector.