Having expanded the team this year with a series of new appointments, we speak to Florian Boecker, Head of Life Reinsurance at SiriusPoint as he tells us about the key issues on his radar right now and developments in the life reinsurance space.
Q1: How would you describe the Life reinsurance sector in three words and why?
I would characterize our sector as large, profitable and ripe for change. Life reinsurance is a USD 100 bn industry which is generating reasonably stable margins of about 10%. It’s also a sector which has been comparably traditional and stagnant in the way business is conducted.
Historically the life reinsurance market has been dominated by a handful of global players with very limited involvement of brokers. Most of the business is locked in long-term treaties which come with a full-service proposition from the leading reinsurers. All these features contributed to very high entry barriers for market challengers – but this seems to be changing now. Insurers are realizing that they cede away material profits through treaties which ceased to be fit for purpose many years ago. Brokers are waking up to the growth opportunities of a massive market adjacent to their current business. And finally, technology advancements and a rapidly expanding ecosystem of external service providers are making traditional reinsurance services look increasingly outdated, if not obsolete. These developments are changing the life reinsurance market and creating prime conditions for new players like us.
Q2: What top three issues are on your radar right now and what can clients do to protect themselves?
Well, we live in rather turbulent times. There are a number of issues we’re tracking in the life reinsurance space right now, which are core to our business. Our top three are:
- The concrete mid-term consequences of the COVID pandemic. The immediate spike in mortality has subsided by now, but we are already seeing a noticeable impact on disability business. Unemployment is usually a lead indicator for increased disability rates and this is something we will need to monitor over time, particularly if we face another economic crisis or further global pandemics; both of which are very possible. Despite COVID affecting our lives for more than two years, in terms of claims trends, this is still early days. While we have seen COVID impacting the mental health of many people, not least due to isolation, it’s still unclear how this will develop over the next few years. The same can be said for the impact of long COVID and much publicised delays in treatment or planned surgery.
- Furthermore the war in Ukraine has clearly changed our assumptions about the geopolitical stability in Europe and will have, at the very least, significant economic effects. No one knows how things will play out and what the long term economic consequences will be, or indeed how that impact will be felt on top of inflation and increasing interest rates. In addition, Russia and Ukraine account for around a quarter of the world’s wheat exports but war has depleted supplies considerably. Whilst other countries, such as India, are looking to fill the void, people there are encountering their own difficulties as a result of extreme heatwave which looks set to threaten the global food crisis.
- And finally, there is obviously accelerating climate change and questions about sustainability which will cause massive challenges. As we have said above, with India being a prime example, natural catastrophes are becoming more frequent and more severe, which is having a real impact upon food shortages and migration. This combined threatens to impact multiple insurance lines, including life (re)insurance.
All these issues require a professional multi-faceted approach to risk management, and an effective reinsurance programme should be part of it.
Q3: What’s unique about the SiriusPoint Life Reinsurance team?
Our team combines a high level of technical expertise with a strong commercial and entrepreneurial mindset. The team has been built with a specific model in mind – a core team whose capabilities are fully leveraged through the use of technology and a network of external partnerships with brokers, MGAs and consultancies. This makes us nimble and improves our speed to market whilst keeping our fixed expenses low – all key to competing successfully in today’s market environment. And last but certainly not least, we have attracted outstanding new talent to build out the team. We each bring different but complementary strengths and genuinely enjoy working with each other.
Florian Boecker, Head of Life Reinsurance at SiriusPoint