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Results season continues with the turn of reinsurance giant Swiss Re sharing its earnings report for the first six months of 2023.

Here’s how Swiss Re fared in the first half, compared to the same period last year:

“The overall result in the first half of 2023 reflects the good positioning of Swiss Re, as well as the quality of our new business,” group chief executive Christian Mumenthaler said in a release. “The performance of P&C Re and Corporate Solutions contributed to a solid second quarter.”

According to Swiss Re, its profit in the second quarter amounted to US$804 million.

Meanwhile group chief financial officer John Dacey had this to say: “In spite of macro-economic volatility, higher interest rates and steadily increasing recurring income contributed to an improved investment result.

“We have maintained our very strong capital position, which allows us to take advantage of attractive business opportunities.”

Swiss Re’s positive financials in H1 were mainly attributed to contained natural catastrophe losses in the period, L&H Re’s performance returning to pre-pandemic levels, and a strong result for Corporate Solutions.

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The adoption of generative artificial intelligence (AI) like ChatGPT is projected to take off across the insurance landscape, with one expert putting the timeline at 12 to 18 months.

Vikas Bhalla (pictured), executive vice president and head of insurance at data analytics and digital solutions company EXL, said that most insurance companies will be exploring use cases for generative AI and large language models across a range of functions during that period.

But he cautioned that even as traction grows for AI, it’s extremely difficult to predict what its use will look like.

“What you will see over the next 12 to 18 months is a progression, as the technology becomes more recognised and more accepted,” Bhalla said.

“People will learn how to manage the risks associated with it, and insurance organisations will move from employee-facing to rep-facing to customer-facing uses of AI. You’ll see the impact really going up, and that is going to be a big change.”

‘Extremely difficult’ to predict AI development

Chubb CEO Evan Greenberg was the latest to convey a sober stance on the impact of AI on insurance, even as he confirmed Chubb is looking to scale its use of the technology claims over the next two to three years.

In a Q2 2023 earnings call, the CEO told investors that applications of large language models would be iterative, and therefore take more time to produce benefits for insurance companies than “breathless rhetoric” in the industry implies.

Bhalla agreed that it’s too soon to see what form such technologies will take even as observers speak about AI’s increasing ubiquity.

“The form that such technologies will take six months to a year from now will be very different… because the pace at which new disruptive technologies is increasing,” Bhalla told Insurance Business. “It’s extremely difficult for one to predict what a form of that is going to be.”

Despite this, insurance companies are keen to deploy customer-facing AI solutions, according to Bhalla. EXL, which works with large insurers and brokers worldwide, said it has seen a “frenzy” of client interest in ChatGPT over the past few months.

What are the most popular generative AI use cases among insurance companies?

According to EXL, the most popular initial applications for generative AI in financial services, including insurance, include:

• Customer service agent assistance – these include bots that search customer activity, claims and payment and investment histories to furnish live customer service agents with scripts to answer questions more effectively.
• Contract analysis and drafting – AI solutions to scour finance, legal or insurance contracts to extract key information, flag risks, or remediate issues.
• Audit – AI that helps analyse 100% of compliance documents, versus the old-school approach of sample-based compliance.
• Code generation – using generative AI to write code, check for bugs and streamline the product development process.

However, there are hurdles for insurance companies to overcome before any significant generative AI usage takes off, EXL cautioned.

The company tells clients that data governance, data migration, and silo-breakdowns within an organisation are necessary to get a customer-facing project off the ground.

“Will insurers have tried [generative AI] in something [within 12 to 18 months]? I think yes,” Bhalla said.

“Would they have scaled it up significantly? In my view, that’s going to take a bit more time. It will depend a lot on the learnings and constraints that we see. There’s still a lot of regulatory approvals and changes needed before companies can scale up.”

Three recommendations for scaling generative AI

Bhalla shared three recommendations for companies experimenting with generative AI: using closed data sets, keeping a human in the loop, and slowly progressing usage over time to minimise risk.

“When you look at creating of your first few implementations, the AI should be applied only to closed data sets,” he said. “You can take a pre-trained large language model, but you need to train it on your own data limits initially.”

Organisations should avoid combining their internal data with external ones, and refrain from exposing their data to the external, Bhalla advised.

“The second thing we telling clients is to have human in the loop,” the insurance head continued. “You can’t delegate the decision making and running of the operation [to AI], whether it is new business, underwriting, or claims. A human in the loop is important because you need to make sure that there is a checking mechanism.”

Finally, insurance companies can manage their risks by progressing the penetration of disruptive AI technology. Customer-facing AI applications are deemed the highest level of use, and therefore the riskiest.

“We recommend our insurance clients to start with the employee-facing work, then go to representative-facing work, and then proceed with customer-facing work,” said Bhalla.

Is your organisation exploring use cases of generative AI? Tell us about your experience in the comments below.

Howden-owned insurance broker Endsleigh has announced that it is extending its contents coverage for UK-based businesses which also have private halls of residence properties in the Republic of Ireland.

To date, the student insurance provider covers more than 350 accommodation providers nationwide and offers policies for the possessions of over half a million students across universities, private halls, and letting agents.

The extension of Endsleigh’s contents cover to the Republic of Ireland will provide students in private halls the following services:

• Protection of key valuables including laptops, tablets, mobiles phones, and general possessions
• Tenants’ liability protection with £5,000 worth of cover per student
• Major incident support for providers and their students in a crisis such as fire or floods

To ensure affordability, the policies are designed with student budgets in mind and the inclusion of low excess comes standard. The accompanying mobile app also lets students easily access their cover to make a claim fast, in addition accessing other student-friendly resources such as 24-hour access to wellbeing support with qualified counsellors.

“Endsleigh is proud to have supported students and accommodation providers across the UK for almost 60 years,” Endsleigh CEO Alison Meckiffe said. “As the UK’s leading student insurance provider, we understand the standards that student accommodation providers are held to, and the role that insurance can play in meeting those standards. By extending our contents cover policies to our UK customers with property in the Republic of Ireland, we look forward to contributing positive solutions for students overseas, as well as those in the UK.”

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Aon has reported its financials for the second quarter ended June 30, 2023. The global broking giant saw a total revenue increase of 7% to $3.2 billion, including organic revenue growth of 6%.

Net income attributable to Aon shareholders increased 12% year-on year to $560 million, or $2.71 per share.

Total operating expenses for the group in the second quarter rose 2% to $2.3 billion compared to the same period prior year due primarily to increased expenses associated with organic revenue growth and investments in long-term growth, the company said.

Aon’s commercial risk solutions arm posted a 5% revenue increase to $1.77 billion. Organic revenue growth for this segment was 5%, with strong growth across major geographies driven by strong retention, management of the renewal book, and net new business generation.

Asia-Pacific notably showed double-digit growth driven by the continued strength of core property & casualty business. The US grew modestly, driven by strength in core businesses, partially offset by the impact of external M&A and IPO markets on M&A services, Aon said.

Globally, exposures and pricing were positive, the company said, resulting in a modestly positive market impact.

Reinsurance solutions, meanwhile, saw revenue surge by 13% to $607 million, compared with $537 million the same period last year. The segment reported 9% organic revenue growth, reflecting double-digit growth in facultative placements and investment banking.

Health solutions reported an 8% revenue rise to $447 million, from $414 million in the same period last year. Wealth solutions saw a modest 3% revenue increase to $352 million. 

“Our global team delivered strong operating results in the second quarter, including 6% organic revenue growth and 110 basis points of adjusted operating margin improvement, demonstrating the strength of our Aon United strategy and ongoing progress against our financial goals,” said Aon CEO Greg Case.

“By aligning solution development around risk capital and human capital, we’re accelerating innovation in our core business and more effectively leveraging our Aon business services platform to address growing client demand for analytical tools that will help them make better decisions on risk and people challenges and opportunities.”

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The British Insurance Brokers’ Association (BIBA) has today revealed several new appointments to its main board.

Among the moves made, David Sparkes has been appointed regulation director in a new main board position, reaffirming the key role regulation plays at the top of BIBA’s agenda. Commenting on his appointment, Sparkes said it is “a great honour” to be invited to join the main board and that he looks forward to continuing to support and represent members in his new position.

After two highly successful BIBA Conferences, Emma Chapman has moved into a new role as conference director, joining the main board. Meanwhile, former conference director, Lindsay Campbell remains in the conference team as conference manager on a part-time basis.

Discussing her new role Chapman said: “I am proud to have been invited to join the board. The BIBA Conference is an important event in the insurance calendar and I’m looking forward to building on its success and helping to shape the future of BIBA”.

Broadening access to the BIBA board

In a press release, BIBA noted the association has made provision for other senior managers – including head of commercial, Nicola Maguire and head of insurance, Alastair Blundell – who now have wider remits, to attend certain main board meetings.

In recognition of BIBA’s awareness of the growing importance of Environmental Social and Governance matters, Vannessa Young takes on responsibility for sustainability alongside her compliance and advisory boards management roles. In addition, BIBA announced its intention to recruit two new team members to bolster its regulation and public affairs activities.

Commenting on the changes, BIBA CEO, Graeme Trudgill said: “I see the overarching themes of issues that are relevant to members being encompassed by regulation & legislation, investment in operational support for members and the future. 

“These changes within BIBA will greatly assist members.  I am also delighted to welcome David and Emma to the main Board.  Having new voices will enable us to stay on top of the broad range of matters that impact brokers.”

Global broker Aon has named finance stalwart Stephen Trauber as a new board member for its Global M&A and Transaction Solutions Advisory Board.

An active board member, philanthropist, and financial advisor and investor, Trauber joins several other members on this Aon board:

• John Cullen, former Aon Commercial Risk, Health and Affinity EMEA CEO and current board chair
• Andrew Ballheimer, former Allen & Overy global managing partner
• Claudio Feser, McKinsey & Company senior partner emeritus and senior advisor
• Pam Hendrickson, Riverside vice chair
• Robin Lawther, Student Housing owner and Standard Chartered and Ashurst board member

Trauber is the former vice chairman for Citi, in addition to its global co-head of natural resources and clean energy transition. According to his LinkedIn, he has served on numerous non-profits and charitable boards of directors, in addition to serving as a financial advisor in over $700 billion of transactions, a portfolio that includes many of the most significant M&A deals across the energy sector.

“We are excited to welcome Stephen to our M&A and Transaction Solutions Advisory Board,” Aon M&A and Transaction Solutions global co-CEO Gary Blitz said. “His deep investment banking experience, expertise in the energy sector and commitment to clean energy transition enhances the current scope of our advisory board and brings strong insight that will help Aon further build out solutions to support our clients in this important sector as we help them navigate volatility.”

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Victor, Marsh’s global managing general underwriting business, has appointed Charles Williamson as its CEO, succeeding Brian Hanuschak, who will become the company’s chairman.

The appointments will go into effect on August 1.

As CEO, Williamson will lead operations for all of Victor’s businesses in the US, Canada, UK, Netherlands, Italy, Germany and Australia, delivering solutions to insurance brokers and their customers. He will report to Martin South, president and CEO of Marsh.

New York-based Williamson brings three decades of underwriting experience to Victor, including serving nearly 25 years in various executive roles at AIG. Most recently, he served as co-founder and CEO of Vault, a managing general agency and reciprocal insurance exchange serving a high-net-worth clientele.

“I look forward to leading Victor’s exceptional global team as we continue to build industry-leading underwriting programs and insurance solutions for our distribution partners,” Williamson said.

“Charles is an outstanding leader with deep underwriting, distribution, and product development expertise,” South said.

“Under his leadership, Victor will be well-positioned to support carriers and agents around the world with cutting-edge digital distribution and underwriting platforms.”

Hanuschak will continue to operate in Chevy Chase, Maryland, becoming a strategic advisor to Victor’s leadership team, working closely with Williamson to ensure a smooth transition for both colleagues and clients.

“I would also like to recognize Brian for his exceptional contribution in leading Victor and thank him for his continued support,” South added.

In other Marsh news, the company recently appointed Pat Donnelly as its president of specialty and global placement and Michelle Sartain as president of Marsh US.

Sartain succeeds Donnelly as president of Marsh US and will oversee the insurance brokerage and risk advisory operations across the nation.

Donnelly will lead various specialized areas such as aviation, construction, credit specialties, energy and power, financial and professional lines, marine and cargo, private equities, as well as mergers and acquisitions (PEMA).

Additionally, he will be responsible for Marsh’s global placement capabilities, including all retail and international placement hubs, portfolio solutions, insurer consulting, climate and sustainability, captive solutions, and claims.

Global natural catastrophe losses for the first half of 2023 were amplified by severe convective storms that swept the US and accounted for 70% of global losses for insurers, but understanding the impact of climate change on these events continues to pose challenges, according to an Aon expert.  

The “primary reasons” for rising severe convective storm (SCS) insured loss costs continue to be demographic and socioeconomic factors, and while climate change may well be having an impact, it remains difficult to pin down exactly how it is influencing the wind events, Aon head of catastrophe insight Michal Lörinc told Insurance Business.

“There is ongoing research into how climate change is affecting these [events] as well,” Lörinc said. “It’s still an open question, in my opinion, because climate change definitely changes the behaviour of how severe storms happen in the US and elsewhere – it affects the ingredients in the atmosphere in which serious storms develop, but we cannot definitively say which part of the severe convective storm losses are affected by climate change.”

Global insured losses from natural catastrophes were US$53 billion for H1 2023

Overall, first half global insured losses from natural catastrophes hit US$53 billion (CA$70 billion) in 2023, representing the fourth costliest year on record for insurers, according to Aon’s H1 2023 Global Catastrophe Recap.

Flooding, winter weather, drought, EU windstorm, and wildfire all contributed to global insured losses.

Climate change impact on natural catastrophe insured losses

While linking climate change and SCS events continues to pose a conundrum, Lörinc said that “climate change is definitely causing some perils in some regions to get worse.”

“For example, temperature extremes are mainly affected, heat waves are getting worse, some precipitation extremes are getting worse in some regions – but severe storms are a bit of an unknown in this sense, so there is definitely some impact but you cannot definitively say how much and exactly how,” he said.

US insured losses dominate in first half of the year

Overall, more than three quarters (77%) of global insured natural catastrophe losses stemmed from events in the US, according to Aon’s report.

US insured losses tend to dominate in the first half of the year, and whether the US will continue to top loss charts into H2 will likely depend on hurricane season, Lörinc said.

Forecasters at Colorado State University have predicted yet another above average Atlantic hurricane season for 2023, with 18 named storms and nine hurricanes, including four major hurricanes. The revised forecast came with “extreme anomalous warmth” being recorded in the tropical and subtropical Atlantic, which forecasters warned could counteract some vertical wind shear typically driven by El Niño conditions.

On Monday evening, following the Aon report’s publication, a Manatee Bay buoy in the waters off Miami, Florida, reportedly recorded what could be a record high temperate of 101.1 degrees.

Favourable conditions for tropical cyclone development is one of the “main concerns” for forecasters looking into the latter half of this year, according to Lörinc.

Extremely high sea surface temperatures, in addition to record low total ice extent in the Antarctic, were flagged as potentially concerning parameters in Aon’s report.

“The Antarctic Sea ice is at record lows, we’ve seen very high ocean temperatures, we have heat waves going on currently, and these are expected to continue into the coming days,” Lörinc said.

Wildfire season poses concerns

Another big potential concern is wildfire season in the US.

“The wildfire season hasn’t started really yet in the in the US,” Lörinc said. “There’s a lot of activity in Canada, so that’s still ongoing.”

Canada is experiencing a record wildfire season, with more than 10 million hectares burned. However, barring the Tantallon wildfire, expected to have caused $165 million in insured damages according to Insurance Bureau of Canada (IBC) and CatIQ figures, that bore down on the outskirts of Halifax in Nova Scotia the remote locations of blazes have meant that the impact on heavily populated areas and therefore the insurance industry has been limited.

As of the end of H1 2023, total insured losses in Eastern Canada were anticipated to be in the hundreds of millions of Canadian dollars, well below 2016’s record $4.3 billion.

Secondary impacts from air pollution stemming from wildfires in Canada have been felt in the country and across the border in the US.

“This is a concern because conditions leading to wildfires are expected to get worse in the future with the warming world,” Lörinc said.

How are natural catastrophes affecting you and your insureds? Share your experience in the comments below.