In a workshop about the future of insurance, risk managers predict further insurer M&As
Insurance mergers are likely to continue into the next decade as the business environment becomes more complex.
Speaking to StrategicRISK, Hans Jorg Schill of Fraport, says: “Insurance companies will continue to merge as we’ve seen with the recent ACE and Chubb, and XL and Caitlin deals. The drivers for these mergers are a reduction in cost and to offer greater capacity to clients.”
Stefan Braasch, of Martens & Prahl Holding agrees. “Insurance companies are facing a lot of change in terms of their structure, such as a separation of insurance branches and business lines, further outsourcing of services, regulatory changes, challenges in interest rates, overcapacity in several markets, high combined ratios, and digitalisation. What we have seen in the past is that such changes leads to balance-sheet focused management.
“As a result, insurance companies will continue to merge. Some companies will be sold, others may decide to stop underwriting and/or close branches or particular lines and, some companies may go out of business. So we will probably see fewer independent insurance companies.
“However, those companies that focus on the industrial business, will need insurance managers and underwriting experts who understand the needs of the industry and who can offer adequate solutions and capacities.”
Both Schill and Braasch will participate in today’s panel debate looking at insurance companies of 2025.
Looking ahead to 2025, Braasch predicts that insurance will change faster in the next 10 years than it did done in the last decade. He says: “The speed of change can be attributed to a number of factors including digital advancement, manmade and natural disasters, new demands from the producing industry, the impact of the capital markets and demographic changes in the established markets which could lead to a lack of experts in the insurance world.”
More specifically, he outlined specific changes within two lines of insurance:
- · Personal lines will be dominated by the digitalization, which could have an impact on distribution and could we could see developments in automatic claims handling.
- · Commercial lines: as the risk landscape becomes more complex, companies will probably demand more insurance consultative services. This will lead to an increase of the demand for the holistic consultant services offered by brokers
The panel session will take place today at 11:30. It will be chaired by Dr. Marc Surminski, editor-in-chief Zeitschrift für Versicherungswesen and participants also include: Stephan Schroder, Axa Corporate Solutions and Dr. Joachim ten Eicken, HDI-Gerling Industrie Versicherung.