News


ome reinsurers appear to have concluded that


reinsurance can be treated as a


commodity and have adjusted their business models accordingly, said Ingrid Carlou, chief executive of Patria Re. But she stresses that this is not, and will not become, Patria Re’s approach. “On one extreme of the spectrum


21.10.14 TUESDAY


Reinsurance is not a commodity: Patria Re S


“We also feel that in some cases the value


of the service itself is more relevant than who is actually carrying the risk, but we continue to see that clients like to see their reinsurers put their money where their mouths are.” She said that over the next 12 months, Patria


you have clients and reinsurers that have concluded reinsurance is a commodity and behave accordingly. On the other you still find companies that look for long-term associations among professionals and who believe this is a people’s business. In the middle you have all sorts of combinations,” Carlou said. “We believe that the real question lies in


being relevant. It is such an important question that the identity of reinsurance itself lies in its midst, and the answer is to be found in what different clients expect reinsurance to be.” She said that Patria Re operates on the basis


that reinsurance should be about transparent partnerships, where both parties benefit. “We also believe this is a people’s business where professionalism is still valued. We know that not everyone cares about or needs what we have to offer, but many people do. Some companies


Ingrid Carlou


“We also believe this is a people’s business where professionalism is still valued.”


seek this approach on the basis of an overall relationship while others want it in specific areas,” Carlou said.


The challenge to model supply chain risk I


ncreased globalisation—in particularly strong growth in manufacturing in Asia—is creating


increased demand for models that quantify supply chain risks, AIR Worldwide’s managing director Yörn Tatge told Baden-Baden Today. “A growing number of products are being


manufactured in Asia, an area where there are more natural catastrophes compared with Europe. You have earthquakes, typhoons and tsunamis and that makes a big difference,” he said. “The Thailand floods in 2011 showed


how interwoven everything is—if a factory in Bangkok is not working that can impact large parts of the flat panel industry, for example. “The automotive industry in particular is


highly dependent on suppliers and has many layers of providers. If any of those fails to deliver it can pose a threat, so these companies are trying to better understand their risk from supply chain failure.”


While insurance products are available, it is


difficult to quantify supply chain risk. AIR has responded by investing time and resources into the issue via its Catastrophe Risk Engineering (CRE) group. While the CRE group has existed for many


years, it has had an intense focus over the last three to four years on developing AIR’s in- house solution to modelling supply chain risk. AIR is also expanding its catastrophe


modelling capabilities to cover the emerging markets worldwide, ensuring that, against a backdrop of softening rates, AIR’s services remain relevant and in demand. In fact, Tatge said he has observed a rise in


demand for AIR’s services that corresponds to the softening rates. “The soft market will continue and it’s


getting even softer,” he said. “You have the influx of capital from the financial industry,


20 | BADEN-BADEN TODAY | DAY 2: Tuesday October 21 2014 Yörn Tatge


and from that perspective we feel that it is even more important to use cat models to understand which business is still profitable, given that most insurance treaties and policies are going down, price-wise. “In a soft market cat modelling is a very


valuable tool towards understanding where you should put your money. As a result, people are investing more in that—they have learned over the past 20 years the difference it can make.” n


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Re will focus on “staying honest” and paying its commitments and obligations expediently. It is also repositioning itself as an international player, with a specialty in Latin America. Its strategy has four strategic axes:


improving its diversification of sovereign and geographical risks; getting closer to its markets and clients; providing its clients and business partners with value-added products and services; and servicing a larger number of specialty reinsurance branches that are relevant to the markets it operates in. She said she expects the main talking


points in Baden-Baden to revolve around concentration, alternative risk transfer, interest rates and tapering. “We will probably not talk about things we


should be talking about, such as the way the euro and the Chinese renminbi are trading, the de-dollarisation of many world economies or growing structural geopolitical tensions.” n


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