INTERVIEW: Alexandre GUERASSIMENKO, Chief Underwriter, Treaty Department Central and Eastern Europe, HANNOVER Re

14 November 2019 — Mihaela CIRCU
Chief Underwriter, Treaty Department Central and Eastern Europe, 
XPRIMM: From the HANNOVER Re's perspective, what do you think are the main challenges for the insurance industry on a worldwide scale while we are moving to 2020?

Alexandre GUERASSIMENKO: Considering the insurance side, we see the implementation of new technologies, creation of up-to-date products and modern ways how to transport added-valued insurance offerings to the clients as main challenges. Besides that, it is worthwhile mentioning the lower interest rates which call for even more underwriting discipline.

From a reinsurance perspective, there is an on-going trend for larger cedants to centralize reinsurance buying decisions and bundle risks into multi-territory products.

Competition on the reinsurance market remains intense and surplus capacities are still there. The loss situation remains challenging in some parts of the market. The profitability of the sector is coming under pressure and technical discipline remains of immense importance.

XPRIMM: What do you think about the evolution of the FUSSR (former USSR) markets? What is HANNOVER Re's strategy for these markets?

A.G.: We anticipate promising growth in the medium- and long-term in this region - with reinsurance prices and conditions likely to remain very largely commensurate with the provided scope of cover.

One of the main challenges is the limited economic growth which brings constrains in insurance spending. As soon as the economies are recovering, the recovery will boost the insurance penetration, which then leads to increasing demand for high quality risk-protection and rated reinsurance capacities.

We consider cooperation with companies in the former USSR to be of high importance for Hannover Re and we remain strongly committed to the market both in good and in challenging times.

One of the solutions we offer are whole account treaties, which combine per-risk and per-event covers for several lines of business designed especially for small and medium-sized insurance companies. This structure is of added value to the companies situated in countries prone to natural perils like Azerbaijan, Kazakhstan, Georgian, Uzbekistan.

We have an excellent team at Hannover Re that provides flexible, undogmatic and quick service in Russian language, which is to the benefit of small-medium regional cedants especially.

XPRIMM:Digitalization and InsurTech are one on the most important trends in the industry. What are HANNOVER Re's solutions for the FUSSR markets in this field? How do you see the future development of the InsurTech landscape?

A.G.: Digital technologies are surely transforming our daily lives. Besides providing support to our clients in respect of cyber insurance, we developed an exclusive online innovation platform named "hr | equarium". The platform facilitates connections between insurtechs and digital innovators with our insurance clients.

Among the solutions presented on this platform related to life and medical insurance are for example "hr | ReFlex" (Automated Underwriting Solution for the Point-of-Sale) and "Qinematic" (Dynamic Posture Scanning). Such solutions help our clients stay successful in the challenging age of digital sales and enables us to help them expand their value chain.

New partnerships can also be established through digital insurance solutions or by way of cooperation with insurtechs as well as through developments in the start-up sector. Hannover Re participates in this segment as a reinsurer and supports companies in their market entry.

XPRIMM: Reinsurers are constantly paying attention to natural disasters and their impact on the global economy, as well as to the role re/insurers must play in helping people and economies to better cope with the Nat Cat losses. What are HANNOVER Re's solutions for closing or narrowing the protection gap, especially in the FUSSR area?

A.G.: This is very true. The coverage gap between insured losses and economic losses is quite high and the reduction of protection gaps offers opportunities for the industry to underline its social relevance.

There is increasingly strong interest in the development of simple coverage concepts based on parametric indices. Such parametric covers are particularly well suited to countries with a low insurance density. Solutions such as these enable governments to improve the protection available to their population against catastrophic events.

Besides that, we are eager to offer our natural catastrophe reinsurance capacity within regular treaties, which will be also driven by the tightening of solvency regimes.

XPRIMM: If we discuss about Russia (the similar tendency is for the FUSSR regions) the increase of regulation activity helped to raise the financial stability and solvability of local companies, and has reduced the disproportion in terms of the number of insurers active on the market? How would you describe the competition on the Russian market/FUSSR region?

A.G.: In we take a look at the market from the insurance perspective, competition is fierce in the region, especially with industrial risks. We consider that the adjustment of reinsurance pricing will put a healthy pressure and result in more underwriting disciple in the insurance market.

On the reinsurance side, surplus of capacity is still there, but due to intense loss activity in 2018 and 2019 in the former USSR-countries, we expect to see an increase of reinsurance rates especially in loss-affected programs.

Additional factors to mention are stricter regulation by the Central Bank of the Russian Federation and preparations for the introduction of a Solvency II regime by 2021, which in its turn encourages market players to consider reinsurance as atool for solvency requirements fulfilment. This increases demand in structured reinsurance solutions and Cat XL treaties in Russia.

XPRIMM: The period of renewal for the following year has started. What are your forecasts for Baden- Baden Reinsurance Meetings, in terms of tariffs, reinsurance programs etc.? Will the soft market maintain?

A.G.: On the global scale Hannover Re anticipates improved prices and conditions overall for the treaty renewal in 1 January 2020.

In the former USSR countries, we expect that programs that have suffered losses will surely record rate increases during the renewal. Rates for even loss-free covers may move higher as well. Particularly marked price increases were already booked during the renewals held during the year.
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