Munich Re is refining its risk management practices to better deal with complex accumulation risks as part of its efforts to cover emerging risks.
Speaking at the Rendez-Vous de Septembre in Monte Carlo, Monaco, recently, Rainer Sachs, head of group accumulation and emerging risks, said the German reinsurer has created a software program called the Complex Accumulation Risk Explorer to deal with complex risks and the interactions among them. The program, which is a trial version, is a tool that analyzes accumulation scenarios, such as the consequences of a prolonged period of heat and drought, which could affect such things as energy generation and air pollution.
Emerging risks are a “natural result” of increasing globalization, said Torsten Jeworrek, a member of Munich Re's board, adding that Munich Re holds a “very high ambition” when it comes to making emerging risks insurable. This involves calling on internal and external experts to provide insight on the nature of risks. Some risks, though, such as nuclear or biological terrorism, have to be excluded from coverage, he said.
During a wide-ranging press conference, Jeworrek said prices for catastrophe reinsurance will increase, and the European Union's new Solvency II risk-based regulatory regime for insurers, all the details of which are not yet known, will be good for reinsurers.
