Reinsurers focus on cybersecurity, pandemic risks

Roland Berger said reinsurers must continuously refine pricing, underwriting, and claims.

The reinsurance business model is expected to remain stable, despite incoming pressures such as evolving risk patterns, operational changes, and rising capital demands, according to a Roland Berger insight.

The insight, written by  Ulrich Kleipaß, Clemens Frey and Carsten Küst, stated that emerging risks, including the growing frequency of secondary perils like severe weather events, demand recalibrated models and customised risk management approaches. 

However, reinsurers must continuously refine pricing, underwriting, and claims processes to address shifts in risk and market dynamics. 

Strategic adjustments, such as optimising contract clauses, enhancing operational efficiency, and expanding value chain robustness, are critical for long-term success.

Externally, adapting to regional regulatory changes and improving capital acquisition by offering granular risk products will be essential.

Cybersecurity threats require specialised insurance products and increased capital allocation, whilst the COVID-19 pandemic has highlighted the need for public-private risk-sharing mechanisms. 

Longevity risks, driven by ageing populations, and political instability present additional challenges, requiring tailored solutions and robust policy frameworks. 

Protectionist policies and geopolitical tensions are also pushing reinsurers toward localised risk management and strategic adjustments, such as friend-shoring and business unit ring-fencing.

Alternative capital sources like insurance-linked securities (ILS) and catastrophe bonds are gaining traction, offering diversification opportunities.