(Re)in Summary
- Cedants are turning to structured reinsurance to manage retained losses and make their balance sheets more sustainable.
- Aggregate, stop-loss and multi-year covers can address frequent losses and accumulation across events, including cyber.
- Parametric products can protect farmers, lenders and vulnerable communities, but need to be affordable and designed around buyers’ needs.
- Risk engineering, claims data and better infrastructure planning can reduce losses before cover is needed, while common triggers and better distribution can widen access to ART.
Alternative risk transfer (ART) can play a larger role in building resilience across Asia, but only if solutions are designed around buyers’ needs and paired with risk prevention measures, speakers at the 22nd Singapore International Reinsurance Conference (SIRC) said on Wednesday.
“Capacity is important but not enough,” said moderator Kaspar Müller, chief underwriting officer for structured solutions at Swiss Re. The panel examined how ART can support resilience at two levels: helping insurers manage their own balance-sheet exposures and providing cover for specific public-sector and community risks.
For insurers, one changing priority is managing the effect of retained losses on earnings and growth. Eric Le Mercier, chief underwriting officer of alternative solutions at SCOR, said some cedants have eased immediate capital pressures and are now looking to make their balance sheets more sustainable. Structured reinsurance can help manage retention and provide an alternative to equity or debt, he said.
“These [structured reinsurance] are products which are coming back,” Le Mercier said, citing a new tier of excess-of-loss solutions designed to help insurers manage retentions.
Stefan Speer, head of international customised solutions at Gallagher Re, said cedants are looking beyond major catastrophe layers to frequent losses and accumulation across multiple events, including cyber. Aggregate, stop-loss and multi-year structures can address those exposures.
“Traditional reinsurance works in severe events, but small accumulation is where the focus is shifting,” Speer said.
Alternative capital can add to the available pool, but its reliability and fit with the risk remain important. Speer said third-party investors bring different return requirements from traditional reinsurers. Le Mercier raised questions about regulation and counterparty protections when investors take on insurance risks more directly.
Benedikt Signer, chief executive officer and executive director at SEADRIF, said concessional public capital can help de-risk new products and attract commercial capacity, particularly where data or experience is limited. But price matters, he said, alongside reliable partners and expertise.
“There’s a big question of price and price sensitivity. What may seem cheap to a reinsurer in a soft market, its very cheap capacity, can still be very expensive to a potential buyer,” Signer said.
Products need to fit the risk and buyer needs
The panel also highlighted parametric insurance for agriculture, public-sector risks and SMEs. Le Mercier noted that well-designed programmes can protect both farmers and lenders against the same underlying weather-related exposures.
Lena Fuldauer, head of resilience & business development at Allianz Risk Consulting, said frequent, smaller events can severely affect vulnerable communities with limited financial buffers. She cited heat insurance for women workers in India, which helps them manage the choice between protecting their health and earning income during extreme temperatures.
“It is not just a capacity question,” Fuldauer said. “It’s really how we use the capabilities, the technical tools, the structures, and our models, and apply those in emerging markets with new perils, so that we can make protection accessible and affordable to those who need it most.”
Fuldauer said reinsurers can contribute to resilience through risk engineering and by bringing claims data and models into infrastructure and land-use decisions. Assessing where to build and how design affects vulnerability can help reduce losses before cover is needed.
The panel said scaling ART will depend on common triggers, stronger distribution and larger programmes. Speer called for greater consistency across markets, while Fuldauer advocated embedding cover into bank lending. Signer added that regional programmes could help replicate successful models across countries.
The industry should assess resilience by “not just measuring capacity we provide, but the risk that we take out of the system,” Fuldauer said.
