Speed is one of the qualities used to measure a successful knowledge transfer. Quick solutions and staying one step ahead of the competition is the name of the game. Hannover Re searches systematically for new business opportunities in order to generate sustainable growth and strengthen the company’s profitable development. With a view to identifying opportunities and successfully translating ideas into business, Hannover Re adopts a number of closely related approaches in order to achieve holistic opportunity and risk management. Of significance here is the interplay without overlaps of the various functions within opportunity and risk management, which is ensured by defined interfaces.

Key elements in Hannover Re’s opportunity management include its various market-specific innovations in the Life & Health and Property & Casualty reinsurance business groups (see the Forecast). What is more, innovative and creative ideas are developed by our employees. Those that can be successfully translated into additional profitable premium volume are financially rewarded. Further elements are the working group on “Emerging Risks and Scientific Affairs” and the “Future Radar” initiative.

Not only that, Hannover Re has set up a stand-alone organisational unit for “Business Opportunity Management” within the Chief Executive Officer’s scope of responsibility. This service unit deals systematically with ideas and business opportunities and it concentrates its activities on generating additional premium volume with profit potential. To this end, promising business opportunities are translated into business models with the support of project teams and tested on the market by the partner b2b Protect. New solutions that meet with a positive response are subsequently launched on the market in cooperation with primary insurance partners. The goal is to generate new business and thereby sustainably promote Hannover Re’s profitable growth. Several of the more than 100 ideas contributed by the global network since the unit was set up have been realised as innovative insurance solutions and successfully handed over to line responsibility; they are now being sold on the market by primary insurers. The following solutions may be cited by way of example:

Weather insurance

The goal is to offer a heavily weather-dependent clientele industry-specific solutions to protect against fluctuations in the weather. Particularly strong interest in this product is currently being shown by companies operating in areas such as construction, energy trading, event management, amusement parks and tourism.

Energy Savings Protect (Energie Einspar Protect = EEP)

This insurance solution enables providers of energy efficiency solutions to take out protection in the event that the promised energy savings fail to materialise. In this case the company in question receives a compensatory payment from the primary insurer. For its part, Hannover Re covers the energy saving warranties of its primary insurance clients. By building trust, the greater planning reliability created by the product makes it possible for many activities needed as part of Germany’s turnaround in energy policy to be undertaken in the first place. Based on its considerable success, as reflected not only in the premium generated but also in its singling out for energy efficiency awards (the enercity-Energie-Effizienzpreis and the Energieeffizienzpreis Perpetuum from the German Industry Initiative for Energy Efficiency (DENEFF)), this product is now available Europe-wide and is being modified for other fields of application.

Energy Output Performance Protect (EOPP)

Many companies would like to bring new solutions to market that generate more energy and are more efficient. Given the innovative nature of the technology, however, customers often lack confidence in such solutions. By protecting the output performance of energy-creating or energy-increasing technologies we help to boost customer confidence and enable providers to set themselves apart from other market players.

The networking of the innovative minds involved gives rise to close links with other projects, working groups and bodies, such as with the working group on “Emerging Risks und Scientific Affairs” in regard to emerging risks and opportunities (see Other risks). This working group carries out qualitative assessments of emerging risks. As a result, however, not only are the potential risks analysed but also any available business opportunities. In the year under review, for example, issues such as “Global shifts in disease patterns due to climate change”, “Supply chain risks”, “Safe foods and their availability”, “Costs of preventive medical screening in the United States”, “Drones”, “Claims resulting from traumatic sports injuries” and “Cyber risks” were explored by the working group.

Cyber-risks

Cyber attacks on critical systems are becoming increasingly common. They can cause considerable financial losses and also damage corporate reputations. Not only that, they can severely hamper private and public life, especially if critical infrastructures are impacted – such as the health, transportation / traffic and energy sectors. In such instances supply bottlenecks with lasting effects as well as major disruptions to public safety may ensue. In a networked world the repercussions of cyber attacks are intensifying because the volume of data stored around the world is constantly growing – and in this context it is not only one’s own technical infrastructure that needs to be secured. On the contrary, the trend towards cloud computing is increasingly shifting the focus to third-party infrastructures and the associated network connection. As part of our holistic risk and opportunity management activities, we are also tackling the question of what new insurance products can be developed in order to protect against the relevant threats. Our presence in this market thus goes as far back as 2007 and we have already developed corresponding products.

If a business idea is translated into reality and a new reinsurance product results, the normal procedure – provided the criteria defined for this purpose by Risk Management are applicable – is to work through the so-called new product process. This process is supported by Risk Management at Hannover Re. The process is always worked through if a contractual commitment is to be entered into in a form not previously used by Hannover Re or if the exposure substantially exceeds the existing scope of coverage. If this is the case, all material internal and external influencing factors are examined beforehand by Risk Management (e. g. implications for the overall risk profile or the risk strategy) and an assessment is made. Risk Management ensures that before it can be used or sold a new reinsurance product must be approved by the Executive Board.

Opportunity management process
 

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