New Publication: Climate Change and the Insurance Industry

Taking Action as Risk Managers and Investors – Perspectives from C-level executives in the insurance industry

Over the last months we have been able to support Geneva Association on the development of the report ‘Climate Change and the Insurance Industry: Taking Action as Risk Managers and investors’ as a client engagement. We interviewed (and obtained written responses from) 62 group CEOs, CROs, CUOs and CIOs of 21 primary insurance and reinsurance companies. Please find the reporting below.

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Patrick Maeder
Advisory Partner



Case study: Moving into the digital world in less than 60 days


The PwC experience from FRIDAY

The Berlin start-up FRIDAY is shaking up the automobile insurance market with a new type of platform for digital motor vehicle products. Working alongside PwC and US software developer Guidewire, the subsidiary of the Baloise group is capitalising on the momentum of the 4.0 era and making full use of its innovative capacities to produce a cloud-based core system.


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Patrick Maeder
Advisory Partner


Jürgen Schatz
Advisory Senior Manager

Three approaches for insurers to address the IFRS 17 technology conundrum

As my colleague, Richard Hart alluded to in his November blog, we held our second IFRS 17 Technology Showcase in Zurich last week.

We similarly hosted a number of IFRS 17 Technology vendors to showcase their solutions and a number of insurance CFOs in a panel discussion. Indeed many of the themes that were discussed in London in November, were also discussed at our Zurich event.

However, the key difference was a bit more of a detailed discussion around what level of ambition insurance companies should aim for – what do you, as a board member at an insurance company, want to achieve as you adhere to the forthcoming accounting principle that is IFRS 17?

There are three possible options, depending on your level of ambition…

Compliance only – This approach is about identifying and implementing a pragmatic solution to make sure you’re compliant across all of the regions you operate in. It’s about using or extending existing capabilities with a minimum investment in terms of both time and resource.

Compliance plus – Here you can make targeted investments beyond what’s needed to achieve basic compliance where you can enjoy the tangible benefits with only a minimal increase in overall delivery risk.

Modernisation – This is where you use IFRS 17 as a catalyst to modernise and optimise your finance function. It’s about using the latest new technology such as workflow management, analytics, cloud and robotics to standardise and streamline your end-to-end finance processes and applications and focusing on delivering significant value back to the business.

Unfortunately there is no right answer for insurance companies. It’ll differ by company. Your choice of approach will obviously be driven by cost of implementation to a certain extent but also by your organisations’ ambition level, scope, size and complexity.

But, no matter which approach you take, it’ll still be important to maximise the changes you do make to deliver as much benefit as possible to your organisation.

If you’d like to discuss any of the themes we covered on the day or above then please do get in touch.

Patrick Mäder
EMEA Insurance Leader
PwC Switzerland

Sven Stark
IFRS17 Global Team Member, Transformation & Technology Driver
PwC Switzerland

Eva Dewor
EMEA Risk & Finance Transformation
PwC Germany

IFRS 17 Technology Day

Thursday 14th December 2017

Systems, data and processes are likely to make up a significant proportion of most insurance company’s capital outlay to adhere to IFRS 17. Given legacy systems estate within many insurers and the changes in reporting required, insurers are heading towards a significant cross-roads around their technology and data roadmap.

You need to be fully equipped with the best view of the options available and the key factors that will influence your decision making process.

Join us at our IFRS 17 Technology Day on Thursday 14th December 2017, where you will get to:

  • Hear from your peers about the process, data and systems challenges they have seen arising from IFRS 17
  • Discuss the key issues and opportunities presented by IFRS 17 with a panel of experts drawn from insurance companies and PwC subject matter specialists
  • Engage with leading technology vendors to learn about their IFRS 17 solutions
  • Understand what you need to do to move from IFRS 17 strategy to execution

Our IFRS Technology Day is a platform on which finance practitioners, vendors and PwC experts can learn, interact and discuss about technological solutions and hot topics.

In the afternoon eight software vendors will present their IFRS 17 solution and you have the chance to raise your questions.

This event is aimed at CFOs, Chief Actuaries, CIOs, CTOs, COOs, Finance Directors, Financial Controllers, FP&A Directors, Finance Business Partners, Program Directors & Managers, Heads of Finance Systems, Data Warehousing Managers and Heads of Innovation in the insurance sector.

Register online

Please note that seats are limited to 85 participants, which will be assigned by the “first come, first serve”-principle.
Therefore please register no later than Nov 12th 2017 to secure your place.

Date and Time
Thursday, 14th December, 2017
09.30 – 17.00 (incl. finger food lunch)

PwC Experience Center
Room “Sandbox”
Rieterstrasse 6
8002 Zurich

You can find the detailed programme here.

Your hosts are looking forward to welcoming you soon.

Patrick Mäder
Partner and Leader in Financial Services
PwC Switzerland

Eva Dewor
EMEA Risk & Finance Transformation
PwC Germany

Sven Stark
Advisory Partner
PwC Switzerland


Maren Rickert
PwC Switzerland
+41 58792 1639

How IFRS 17 impacts CSM – Actuaries vs Finance

As all insurance companies are probably aware by now, the introduction of IFRS 17 comes with many new requirements. One of these new requirements is a contractual service margin (CSM). The CSM is the unearned profit of an insurance contract. While technical experts are still considering what methodology should be used to calculate the CSM, CTOs and other IT experts such as heads of systems are investigating what technology should be used to calculate the CSM.

  • The contractual service margin (CSM) is a significant part of IFRS 17
  • How are insurance companies factoring this into their IT strategy?

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Blockchain, a catalyst for new approaches in insurance

Thought up as the underlying architecture for the Bitcoin cryptocurrency in 2008, blockchain technology is currently a hot topic and the subject of numerous studies in sectors outside the payments industry to which it has often been confined in the past. Blockchain is considered by some to represent the next technological revolution after the Internet.

In fact, the idea of a decentralised, secure and transparent ledger distributed among users can be relevant to many different fields. The insurance industry, with its highly complex processes, could be a major beneficiary of the technology.

By removing intermediaries in a new type of arrangement, blockchain technology could completely upend the insurance value chain:

  • Development/acceleration of new products/markets for which business models were difficult to define until now.
  • New approaches to underwriting, contracts and claims management, particularly through a combination of smart contracts and the Internet of Things (IoT).
  • Overhaul of the modus operandi of insurance agreements.
  • New reinsurance approaches, particularly internal reinsurance via smart contracts.
  • Transformation of asset management with automated settlement and delivery of intangibles.

PwC’s recent study on the topic (“Chain Reaction: How Blockchain Technology Might Transform Wholesale Insurance”) shows that while 56% of insurance firms recognise the importance of blockchains, 57% still do not know how to respond and capitalise on this opportunity.

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Is the (re)insurance industry fit for growth?

As disruption mounts, insurers and reinsurers are facing huge strategic challenges in maintaining competitiveness, driving change and delivering all-important growth. Perceived wisdom has been that these are mutually exclusive goals, but in this report PwC Strategy& sets out why they can coexist if organisations are committed to being fit for growth

The industry will undergo significant, disruptive change
The insurance industry globally continues to be the most disrupted of any sector3. In our work with (re)insurers, we’ve noticed anxiety about
the technological changes coming from current competitors, start-ups, and Silicon Valley that are reshaping the industry. When asked them
what posed the greatest threat to their operating models, the most popular response (44% of all Fit for growth survey respondents), was “market disruption or the use of new technology.” Second on the list was “changing customer needs and offerings from new market entrants” (24%). These responses outweighed concerns about lack of customer insight, availability of talent, regulatory change, and the economic environment combined.

Need to grow
Most companies know that growth is critical to long-term success. Most are somewhat or very confident in their ability to grow, with many having growth targets that far outpace those being achieved in the industry as a whole. We therefore expect there to be haves and havenots. The haves include companies that believe they can outperform competitors through better execution of the tried-and-true strategies that are common in the industry. We expect have-nots to have the self-awareness to know that they are not out in front of the market and are therefore waiting for the storm to pass. As we expected, not all carriers are pursuing growth at all costs. Only 30% of FFG survey respondents said that top line growth was their primary strategic focus. However, only 9% were willing to admit that growth was of minimal focus, while the remaining 60% of carriers took a more balanced view.

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InsurTech The new normal for (re)insurance

(Re)insurers are coming to see InsurTech as a transformational rather than disruptive force and embracing the innovative potential within their businesses. How can you make the most of this ‘new normal’?

The disruptive impact of InsurTechs has been mentioned in a multitude
of publications. But are InsurTechs really as disruptive as commonly
claimed? Will they make incumbents obsolete? With the first wave
of InsurTech well established and a second wave coming, we believe
that CEOs have become well aware of how InsurTechs can impact their
business. And we observe a change: Fear is turning into bullishness and
scepticism into collaboration. The new norm is to embrace digital natives and open up for collaboration. Are InsurTechs truly disruptive?

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Uncharted waters: Tackling reinsurers’ riskiest exposures

There are no tried and tested strategies for dealing with the banana
skins that have shot to the top of reinsurers’ risk registers – cyber
risk, change management and political upheaval. How can you get
to grips with these highly unpredictable and disruptive exposures?

Insurance Banana Skins is a unique survey of the issues at the top of the industry’s risk register and how these perceptions change over time. The
biennial report is produced by the The Centre for the Study of Financial Innovation (CFSI) in association with PwC.

What’s most striking about the latest set of results is how far and how fast the risk landscape is shifting. Having for many years been dominated by the familiar headaches of solvency regulation and a challenging market environment, the risks that now cause the most sleepless nights are rooted in the shock and uncertainty of the new.

At number one is cyber risk, reflecting both the anxieties of underwriting a risk that’s constantly shifting and the rising threat to reinsurers themselves. Far from being just a technology risk, cyber is now a huge reputational and systemic concern. At number two is the industry’s ability to address a formidable agenda of new technology and shifting customer and conduct expectations, along with the associated pressure on service, performance and costs. Signs of the upheaval are all around us, from new forms of underwriting and risk transfer, to increased automation and inroads from InsurTech right along the value chain. And even more disruption is coming up on the horizon in areas ranging from artificial intelligence (AI) to driverless cars.

We also focus on what the Banana Skins survey describes as ‘political interference’ on account of its rapid rise up the risk rankings and particular relevance to prominent reinsurance centres, notably the UK and Bermuda. As a global industry, reinsurance faces considerable challenges from the political developments, changes in trading arrangements and the shift towards more nationalistic rather than global approaches. Our analysis of the implications looks in particular at the implications of Brexit and an uncertain US tax agenda.

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FRIDAY sets new standards for insurers

Together with PwC and US software developer Guidewire, Berlin-based digital insurer FRIDAY has launched its platform for digital insurance products. The cloud-based core system allows innovative insurance solutions to be swiftly in-troduced on the market: the Basler Versicherungen subsidiary is thus setting new benchmarks for the sector’s digital solutions Europewide. The trio formed out of FRIDAY, Guidewire and PwC successfully completed the development and implementation of the platform in fewer than sixty days.

Zurich, 7 September 2017 – A dynamic market and rapidly changing customer needs demand that insurers offer ever more flexible and wider product and service ranges. FRIDAY is therefore performing pioneering work with the launch of its new, comprehensive insurance platform. The insurance company and Basler Versicherung subsidiary translated its innova-tive digital solution into reality in fewer than sixty days. The basis for the platform is provided by the Guidewire InsuranceSuite™, a tried and trusted core insurance system from the world’s leading software developer Guidewire. This enables centralised sale and man-agement of insurance contracts, claims management, customer data management, and col-lection and disbursement. Never before has software been so rapidly tuned to a company’s needs and so swiftly implemented as at FRIDAY.

Smooth collaboration, intensive dialogue
In close, smooth collaboration, the advisory company PwC provided support in successfully integrating and adapting the system to the digital insurer’s needs. “Within a very short time, we were able to put together an experienced, international team and ideally complement the two companies with our expertise and project methodology. Constant and intensive dialogue was the key to the success,” says Patrick Mäder, Leader of EMEA Insurance at PwC Switzerland. “The speed at which this digital solution was launched is a one-off. FRIDAY has estab-lished a new standard in the continental European market.”

Long-term value creation thanks to “digital insurance”
Besides the rapid launch, FRIDAY is a convincing presence with various innovative insurance products and services for the automobile market. Since its market introduction in March 2017, FRIDAY has introduced several innovations on the German market. Car insurance cancellation at one month’s notice is just as much a novelty as kilometre-precise premium calculation according to how far the insured vehicle has actually driven. “The development and swift implementa-tion of product innovations requires a solid and scalable structure. The core system imple-mented with our partners PwC and Guidewire enables FRIDAY to introduce digital processes right along the value creation chain. With the digital insurance platform, we are therefore not only offering a novel usage experience for customers, but also laying the foundation for part-nerships,” says Dr Christoph Samwer, FRIDAY co-founder and CEO.

Contact Us

Patrick Mäder
Leader EMEA Insurance, PwC Switzerland
Tel.+41 58 792 4590

Lukas Jaworski
Head of Marketing Communications & Content Strategy, FRIDAY

Jan-Hendrik Völker-Albert
Head of PR & Communications, PwC Switzerland
Tel.+41 58 792 1885