We have to take the challenge to fight climate change very seriously, R+V Re’s CEO

As the intensity and severity of natural catastrophes continues to increase worldwide, there is more that the re/insurance sector needs to do to show its value in the climate fight, and according to Christoph Lamby, CEO of R+V Re, the German reinsurer, there are certain points that don’t come across in public discussions enough, where the insurance and reinsurance industry can help.

“The first one is if we want as an insurance and reinsurance industry, if we want to help the public and companies/governments to better withstand the financial impact of natural catastrophes, there is one important obligation we have to fulfill. We ourselves as an insurance and reinsurance industry, have to be financially robust. We have to be in a position to withstand the financial impact of natural catastrophe. So, we have to manage our risks in a financially responsible way,” Lamby said during a recent interview with Reinsurance News.

He continued: “The second aspect is more than obvious, and this is more an issue where R+V comes into play as an insurance company, especially here in Germany, not so much as a reinsurer if a natural catastrophe happens, you as an insurance company need a claims organisation which is in a position to help the clients as quickly as possible and as unbureaucratic as possible, and in a reliable way as much as possible too. The insurance industry needs large claims handling organisations which are ready to go whenever something happens.

“The third point here is: we have a pricing function and our job is to price the financial impact of natural catastrophes. So, if we are totally wrong with that, then perhaps buildings are being built in the wrong spots and dams are not being built where they should have been built.

“So, these are the three aspects where the re/insurance sector plays a crucial role in managing the impact of natural catastrophes: we have to be financially robust to manage all this, we have to have good claims handling organisations, and we have to fulfill our pricing function in order to incentivize loss prevention and better risk mitigation in order to cope in a better way with the financial impact of natural disasters.”

Moving forward, Lamby provided us with an overview on R+V Re’s commitment to sustainability, as well what the company offers overall for the industry.

“I think for all of us, we have to take the challenge to fight climate change very seriously, whether as individuals or as companies. We as R+V have signed self commitments with all the United Nations Principles for Sustainable Insurance, United Nations Principles for Responsible Investment. What drives us here in Germany and in the EU, we have this new corporate sustainability reporting directive, which is a fairly formal approach and a lot of our energy right now over the whole R+V Group flows into fulfilling these formal requirements by the legislator.

“What does this mean exactly? The CSRD introduces enhanced sustainability reporting requirements. Companies must publish detailed information on environmental, social, and governance (ESG) factors. We have to publish our ESG activities, or ESG data for the first time with the publishment of our annual statement in spring 2025, and the basis will be the year 2024 so this is the bulk of our activities at the moment. A least within the EU all major companies and insurers and reinsurers have to do the same thing, so there is no big differentiation there.”

Moreover, with the key January reinsurance renewals slowly approaching, Lamby provided some insight in regards to his expectations heading into the period.

He said: “The reinsurance industry has come off a period of disappointing results. They really had to act and as far as I can tell, including us, a lot of the players acted. Going forward, I’m expecting much more stability. We are still a little early in the year for hard statements, but nevertheless, as of today, I would expect to market, in most cases with high stability.

“There will be probably some corrections here and there where significant losses occurred. That’s pretty normal, but overall, I’m expecting a lot of stability going forward.”

Lastly, Lamby then explained what challenges and opportunities artificial intelligence poses for the re/insurance sector, which has become an increasingly hot topic across the sector in recent years.

“With this new AI world, there are plenty of opportunities, but also significant challenges. The opportunities are: we can definitely become faster, more productive and we can generate whatever we do in a higher quality, allowing our services to become better. Perhaps we can provide new forms of products going forward. All this is not so much dependent on new technology, but ultimately on data, and I welcome very much all the push and the hype around artificial intelligence, which requires that we take much better care and are much more demanding regarding data, not only in terms of availability, but quality, interchangeability and so on,” Lamby commented.

“So there’s no way we can afford going forward and not really be demanding with data. So the challenges here are less on the technologies. I think the technological dimension is relatively straightforward. But beyond that you have to be aware that an organisation which relies more and more on black boxes will eventually itself turn to a certain degree into a black box. So, how do you make sure that the black box, with all the advantages, is okay, who takes the responsibility that everything is okay? Who becomes liable if something is not okay and goes wrong? And how do you manage the know how within your team because the more everything is being pushed into black boxes with all their advantages, the more and more you run the risks that your teams lose knowledge. So how do you manage that?

He concluded: “I think we are in great times. AI is fascinating and it will change our industry for the better, I’m sure. I see lots of opportunities, whether it’s in claims handling whether it’s in portfolio analysis, there are lots of things which can be improved with that technology.”

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