How to leverage digitalisation and ART

Swiss Re Corporate Solutions’ head of DACH, Michael Rüsch, tells Commercial Risk how the insurer helps German corporates beyond simply providing insurance capacity – from digital portals to inhouse risk models and alternative risk transfer (ART) solutions.

The most striking change to Germany’s risk landscape in recent years has been the rise in extreme weather events. According to Swiss Re Institute data, insured losses from natural catastrophes reached $60bn globally in the first half of 2024, with Germany driving above-average losses from floods.

Clearly this is a challenge for both insurers and corporate risk managers, says Michael Rüsch, head DACH for Swiss Re Corporate Solutions.

“We cannot ignore climate risks because they impact all companies, especially multinationals. How do you plan for the next five to ten years? It is clear that climate risks won’t get any better in the near future. Some regions may be more exposed than others, but it should be on everyone’s agenda.”

Swiss Re Corporate Solutions has developed a number of solutions to help clients more accurately model their exposures.

“Climate change and natural catastrophes have been key risk issues for many years. The first step to addressing these is knowledge and understanding,” says Rüsch.

There are other macro risks facing German corporates, according to Rüsch, including the fragile geopolitical environment and its impact on companies’ operations.

“We help our clients protect their business and their global supply chains from natural or political risks. We use data insights to help them find alternative ways of operating or new locations that have less exposure to these risks,” says Rüsch.

Swiss Re Corporate Solutions aims to help clients cope with the risks they encounter across the world. As part of its international programmes offer, the company has developed a technology platform called PULSE that coordinates activities and data flows related to risk assessment, programme administration, risk engineering and claims management.

Rüsch explains the platform as follows: “PULSE easily integrates with clients’ systems and provides risk insights through a portal that allows clients and their brokers to access and manage their global insurance programme from one secure place. The portal combines several aspects of the insurance programme onto one easy-to-use customer interface and gives clients access to real-time information.” Swiss Re Corporate Solutions is continuously enhancing the services and functionalities on the portal to keep it up to date with the changing risk environment.

Swiss Re is also expanding its alternative risk transfer (ART) capabilities. The (re)insurer has been a forerunner in the use of captives, parametrics and catastrophe bonds. The rapidly evolving risk landscape could serve as a catalyst for greater adoption of such innovate solutions among corporates, says Rüsch.

“Traditional risk transfer is always important but there is a price to it based on capacity. ART will gain in importance in the coming years as an alternative means of risk financing. We have had many interesting discussions with corporates looking at this very seriously,” says Rüsch. “I see this as an increasingly relevant topic in the German market as well.”

Parametric opportunities

For clients, there are clear benefits to parametrics, such as an immediate payout and short claims process, says Rüsch. However, it is still early days. “We have to develop more capacity, not just in limits but in terms of resources, specialist knowledge and distribution partners. We are already seeing more companies investing in this field and helping us to raise awareness among clients – which is very encouraging.”

For Rüsch, the use of parametrics is also another opportunity to develop partnerships between insurers and insureds, something that will be key to addressing risks such as climate change and geopolitical issues. The partnership theme is also clear to see in Swiss Re’s development of digital services.

At the heart of this digital strategy are the company’s proprietary risk models. “We use them in three ways,” says Rüsch. “Firstly, internally to increase efficiency of our processes, from underwriting to claims.

“Secondly, we also share our strong data capabilities with clients via our Risk Data & Services (RDS) platform, where data can be turned into a digital twin to gain a truly accurate digital world representation of your business. The digital twin is enriched with risk insights and know-how from Swiss Re and other leading risk insights providers, enabling for a more granular and accurate overview of risk.”

“And lastly, we are in the process of developing new digital tools for supply chain management and geopolitical risks by working with the broader risk community – i.e. brokers and risk managers,” says Rüsch. “This helps us define the right solutions and develop the best data models that will work across the insurance value chain.”