In each edition of EXPOSURE we ask three experts for their opinion on how they would tackle a major risk and insurance challenge. This issue, we consider how (re)insurers can embrace new technologies, provide new products or collaborate more closely in order to solve the world’s risk problems more effectively. With insight from Tom Hutton, Stephan Ruoff and Eugene Gurenko


Tom Hutton

Managing Partner, XL Innovate

Continued innovation will result from the visible impact and success of a few high-profile ventures. And it will be maintained by a willing and supportive regulatory environment and a stable source of venture investment and liquidity.

Nearly 30 years ago, when RMS was started, there were no examples of successful insurtech venture stories to emulate. Most venture investors doubted that a tech company could achieve penetration and growth serving the insurance industry, known as a tech laggard. Meanwhile, carriers had little experience with risk collaborations, apart from their work with brokers. All of this presented quite a challenge.

Innovation in insurance will result from the visible impact and success of a few high-profile ventures

The current stream of insurtech ventures has grown out of success stories in financial technology (Lending Club, SoFi, etc.), examples of novel data and analytics for insurance customers, liquidity events in the space, investor support from traditional VCs and corporate venture arms, and media coverage. The insurtech conferences alone are mind-bending, with thousands of attendees and hundreds of exhibitors.

The next step in the innovation cycle will require a few breakout success stories from this new wave of ventures. Success stories can be measured in carrier impact (data and analytics), market impact (new distribution, new product), high visibility and, most of all, financial success. There are already a number of likely breakouts in this current wave, including the likes of Lemonade or Trov, and more. A similar analogy can be seen in fintech, where startups like Credit Karma, Square, Venmo and Kabbage showed the rest of the industry what could be possible early on.

So watch for these breakout companies and any acquisitions in the space. The rest will follow.


Stephan Ruoff

CEO, Tokio Millennium Re AG

The advancement of network and platform thinking would facilitate greater industry innovation. Technology has changed how (re)insurance business is transacted. We are seeing blockchain initiatives through consortia such as B3i and R3 and the Lloyd’s electronic placement platform “PPL”.

Through cloud technology and distributed ledgers, we have solutions that enable shared data platforms. However, we must learn from trading environments such as stock exchanges. Here, trading parties operate on a single platform where data flows easily, and which supports interaction between the various parties.

Our industry should develop a similar risk-exchange environment — a transactional environment that supports a consistent data approach and enables all parties to interact with data in a communal environment rather than each storing their own data on their specific platforms.

We must develop and adopt shared data standards so that risk can be consumed in a single data format

We must develop and adopt shared data standards so that risk information can be consumed in a single recognized format. This would prevent data duplication and reduce internal processing requirements and transaction costs. This could also reduce regulatory burdens, as developing an industrywide data language could spawn a more harmonious global market regulation on how data can be used.

Another key aspect is data mining through artifical intelligence (AI) to boost risk quantification and predictive analytics. With better data standards plus more widely shared platforms, more risk can be insured, thus further reducing the protection gap.

Our thinking must go beyond (re)insurance itself. At TMR, we have helped pioneer greater data consistency and network thinking to drive more interaction between insurance and capital markets to help match risk and capital pools. We believe such efforts create huge innovation potential.


Eugene Gurenko

Lead Insurance Specialist, World Bank Finance

In most countries, government still continues to play the role of the reinsurer of last resort. Such an open-ended commitment creates strong disincentives on the part of homeowners to acquire insurance coverage for natural disasters.

As government involvement in post-disaster compensation is not going away, the reinsurance industry has an important and innovative role to play to encourage the development and growth of the primary catastrophe insurance market.

Reinsurance capacity can be pooled to support the development of local catastrophe insurance markets

Primary insurers are always highly reluctant to offer catastrophe risk insurance products to consumers without unlimited reinsurance coverage. However, this is hard to find because of the initial small scale of such catastrophe insurance pilots, potentially high concentration of risk in the early stage of portfolio building and uncertain premium growth prospects. So how can these challenges be resolved?

One solution is for reinsurance capacity to be pooled to support the development of local insurance markets. The U.S. private flood insurance market, for instance, could be a great testing ground for such a concept whereby large reinsurers would provide earmarked guaranteed reinsurance capacity to any primary insurer that agrees to sell a preapproved (by a panel of reinsurers) flood insurance product at a minimum technical price. Such an approach will go a long way toward considerably raising the level of catastrophe insurance coverage provided by the reinsurance market without waiting for notoriously difficult shifts in government disaster compensation policy.