Scor : Ensuring the sustainability of insurability in a networked world

'It was my pleasure to have opened the 2019 SCOR Annual Conference. These two days offered an excellent opportunity to exchange perspectives, ideas and experiences around the theme of The Acceleration of Hubs, Networks and Connectivity. The discussion was rich, and while these topics are of vital interest to everyone in the world today, we found no shortage of implications for the (re)insurance business.

Networks can be simply defined as interconnected systems of people or things. Yet when we begin to analyze them more closely, we see that they differ enormously among themselves - as all living organisms - in terms of shape, density and the directionality of the relationships they comprise.

Three major themes ran through the conference - themes that are at the heart of economic and (re)insurance activity.

1.

Traditional 'brick and mortar' networks - with nods (e.g. harbors) and links (e.g. bridges and marine routes) are being transformed by the growth in hubs. Real-time activity is accelerating through global interconnectivity, while the volatility of the geopolitical environment is increasing, as is the fragmentation of today's highly interconnected supply chains. In this context, the Chinese 'One Belt one Road' experience serves as one of the best examples I know of the revival of traditional networks, and its impact will be long-term.

2.

The transformation of traditional, tangible networks is amplified by the growing importance of digitization and the intangible, and the so-called 'network effects'. With this shift in focus - to assets that include the realm we generally refer to as 'cyber', but also go far beyond this realm to include things such as liability, intellectual property and other digitally driven products - 'old' industries are dematerializing as new ones continue to appear and grow. Automation and robotics are taking on an ever-more important role. All of this brings with it the emergence of new vulnerabilities - and new (re)insurance covers. In the insurance business, the shift from tangible to intangible assets drives a number of phenomena, both in terms of financing and of many others.

3.

And of course, all of this must be managed in a sustainable way. At SCOR we take a long-term view of our business. For this reason, when we look at how to ensure the development and sustainability of insurability, we leverage on the UN 'Sustainable Development Goals' ('SDG') framework. Divided into four basic areas: empowering people through education, finance and social infrastructure; achieving the energy transition; preserving natural capital; and fulfilling basic needs through access to healthcare, sanitation, energy and nutritious food, these goals provide a comprehensive framework for action.

The sustainability imperative - Generating (re)insurance underwriting opportunities

Insurance companies tend to often approach Corporate Social Responsibility through a negative lens, i.e. through the exclusion of certain risks and business. Yet there are a number of insurance opportunities that stem from the sustainability imperative. SCOR looks at renewable energy, for example, as a business opportunity. The SDG framework offers us the opportunity to accompany our clients in the transition towards a sustainable future and to contribute to reinstalling long-term security.

The shortening of economic agents' time horizon is another reality we can't deny. As reinsurers, we need to reconcile the short term with the long term. On the one hand, we need to deliver value to clients and society by strengthening the sustainability of human and economic activities. We need to create social value by carrying long-term liabilities, whose value is deeply connected to the state of the planet, nature and human beings. Yet at the same time, we need to deliver short term returns to our shareholders - and we need to sustain them.

Our rich expertise in data analysis, risk modeling and risk transfer solutions, as well as our shock-absorbing capacity and the fundamental function of pooling risks to optimize diversification benefits, ideally position us to promote insurability and to bridge the 'protection gap'.

In the coming days we will publish a series of blogs from the various presenters at the SCOR 2019 conference. I hope you will find, as I did, that these ideas, concepts and approaches are of vital relevance to the future of (re)insurance, and to its role in the sustainability of our highly networked planet.'