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M i n u t e s
ERI – Meeting in Hannover (27th – 28th September 2012)
Participants:
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Michael Bruch – Allianz
Markus Aichinger - Allianz
Dr. Gerhard Schmid – Munich Re
Heidi Strauß – Muich Re
Reto Schneider – Swiss Re
Sara Albert – AXA
Jörg Grünwald - Zürich
Matthias Scheurer – Zürich
Neil Smith – Lloyds
Dr. Andreas Tacke – Hannover Re
Dr. Michael Held – Hannover Re
Stephen Lawson – Hannover Re
Excused: RSA and AIG
Distribution List: ERI group and CRO Forum
Chair: Dr Andreas Tacke (Hannover Re)
Minutes: Stephen Lawson (Hannover Re)
Day 1
Welcome and Introduction
RSA will continue to support the ERI group, however Keith Baxter is no longer available as a
participant but a replacement will be appointed.
The CRO Council in USA has shown interest in members participating in ERI meetings. An
application from ACE has been received. The CRO Forum stipulated no more than three or four
additional members from this source. This development would have the ERI support as long as
the new applicants participate in meetings and contribute to the ERI work.
The ERI chair will report to the CRO Forum directly once a year on the work of ERI. The CRO
Forum internet site will be updated and a special ERI section will be introduced.
The following comments on the presentations are only brief summaries, action points are
highlighted.
Presentation “Risk Radar” (Reto Schneider, Swiss Re)
Reto Schneider summarised the work being done in the Integ. Risk project as part of the
European Emerging Risk Radar Initiative (E2R2), in which Swiss Re is involved, to develop an
automated risk radar with tools for evaluating emerging risks.
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It is hoped to form a public private partnership with the help of EU money from 2014 onwards.
The project should be finalised by May 2013.
Until the advent of EU support, extra financing will be necessary and Reto asked to what extent
this could be realised from other ERI members. After a discussion concerning the extent to
which this project might create an added value for the present ERI work as well as internal
budget constraints, there appeared to be little support for providing the necessary finance.
Presentation “Emerging Risk Units at Member Companies” (Reto Schneider, Swiss Re)
On the initiative of the Swiss Re, a questionnaire was completed by the members with regard to
the way in which emerging risks were being dealt with in the individual companies. Although
there would appear to be no substantial differences in the processes, there were in the size of
the units involved. Whereas Swiss Re have 4 designated staff and Munich Re 2 the other
member companies make use of staff where a relatively small percentage of their work time is
allocated to emerging risks.
.
Presentation “Cyber Threats,Social Networks” (Matthias Scheurer, Zürich Insurance)
The presentation illustrated the growing size and complexity of these risks, especially in
connection with the development of the social networks. It emphasised the degree to which
personal data has become available and the inherent possibilities of data breaches with
catastrophic effects. The danger is magnified by the almost total reliance of particularly the
younger generation on the cyber world products and the different social networks.
Discussion on ERI “Endocrine Disruptors” Paper
The latest version of the ERI ED paper was discussed. In particular changes were suggested to
the conclusion to emphasise the significance of environmental effects. Michael Held will
incorporate the changes and produce a final draft to be distributed. The reaction otherwise
to layout and content was positive.
Emerging Risk Developments and Risk Radar Update
The ERI risk radar from 9/2011 was analysed and adjustments suggested. It was agreed that
the following should be moved more towards the centre as their importance has increased:
Social Unrest, Cyber Risks and Increasing Personal Damage Compensation.
The following two can be removed from the radar as they are no longer considered to be
emerging risks: Terror and Gene-therapy.
Several new emerging risks were identified to be added to the radar such as the Increase in
Infectious Diseases, Cloud Computing and Supply Chain Risks. The radar should be extended
by a time element reflecting the expected period of manifestation (0-5 or 5-10 years). The
significance of the risk should be reflected in the size of the font.
Parallel to the risk radar, it was discussed to instigate a list of developing trends which could
lead to further emerging risks in the future. Initial examples suggested were: Megacities,
Resource Scarcity, Climate Change (a trend rather than a risk) and multiple Cat. Events. Swiss
Re will incorporate these changes and issue a new version of the risk/trend radar.
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Day 2
Presentation “Medical Devices” (Dr. Siebert, Orthopaedic Surgeon)
Using the example of a knee replacement operation, Dr Siebert explained the quality and price
differences in medical products used for this operation. Due to the fixed remuneration system
introduced by health insurers in Germany for operations, the nature and cost of the medical
product inserted as well as the length of time spent in the operating theatre will determine the
amount the surgeon can earn.
There are apparently ca. 45.000 classified medical products on the market. HDI – Gerling have
developed a product classification system M-Check for a selection of these risks as a support
for the underwriters and in which Dr. Siebert as an external consultant is involved. Products are
classified in a risk index from 1 to 6, with 1 being the best.
Presentation “IT Risks” (Heidi Strauß Munich Re)
This presentation reiterated several points from the previous day. It particularly stressed the
vulnerability and complexity of the cyber world from an insurance point of view. Particular
consequences are to be seen for property and casualty business through loss of data, business
interruption, cyber attack for physical and non physical damage.
IT products are most developed in US and Europe and are being driven by local legal
requirements. Other factors affecting insurance in the future are the development of cost saving
cloud services and the inherent difficulty of physically locating data as well as the reputational
risk for the insured.
Presentation „Medical Malpractice – US Perspective“ (Hartmut Gradtke Hannover Re)
Apart from some comments on the state of the medical malpractice market, which on a calendar
year basis has been showing technical profits over the last 7 years mainly due to a low loss
frequency, the main emphasis was on gauging the effects of the health system reform (“Obama
Care”) in the US on the future market development.
Behind the reform lies the principle “more for less” with less money being spread around a
system which suffers in any case from inadequate financing. In order to achieve the necessary
economies of scale to adapt to this new development, the trend should see larger more
anonymous health care units with a greater propensity for mistakes and thus for potential
losses. At the same time these larger units should generate significantly more premium offering
a certain potential for (re)insurers.
Presentation „GMOs ( Genetically Modified Organisms) and Insurance“(Sara Albert, Axa)
The most significant insurance effects arise from the dangers of toxicity, allergies and crosspollination. Geographically, the largest loss would probably arise in the USA or Canada, where
the production and use of GMOs are most significant and the regulation is less stringent than in
other countries.
At the present most insurance policies in Europe have an exclusion clause for GMO
contamination. However public pressure could lead to mandatory insurance cover.
Presentation „Supply Chain Risks“ (Neil Smith, Lloyds)
Lloyds have commissioned a report on this subject, which should be published early 2013.
Traditional insurance products such as standard BI and CBI are not adequately addressing the
complexity of global manufacturing processes. In particular, there are problems in monitoring
potential accumulations.
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Stand alone products have tended to be too limited in scope and expensive. As a result such a
product could be more interesting for small to medium sized companies, where the exposure
would be more transparent and the limits required manageable. This topic will be further
pursued at the next meeting 2013.
ERI Lobbying Activities with focus on loss prevention
After handover of the ERI “Space Weather” paper to Geneva Association further discussion is
needed to secure appropriate follow-up.
It was decided to include this topic as an agenda point for the next ERI meeting in spring 2013
again. In the meantime a working group (MR (lead), SR, HR) will prepare ideas.
Organisational issues
Neil Smith agreed to take over the chairmanship of ERI in 2013. At the moment Lloyds is not
represented in the CRO Forum. Neil will discuss this matter internally and try to arrange for
one of the syndicate risk managers to become a CRO Forum member. If this is not
possible, an alternative could be for one of the CRO Forum members to sponsor Lloyd’s
membership.
It was decided unanimously to accept the ACE application for ERI membership. Andreas Tacke
will inform ACE accordingly.
The following alternative suggestions were made on topics for the ERI Position Paper 2013:
Food Scarcity
Social Unrest
Cloud Computing
Supply Chain Risks
The next ERI meeting is scheduled for the second half of March 2013 in London. Neil Smith
will confirm the date for the meeting as soon as possible.
Stephen Lawson (Hannover Re)
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