Swiss Re’s Arquint: Corporates turn to alternative risk transfer amid rising global threats

As global risks become increasingly complex and costly, more corporate companies are turning to alternative risk transfer solutions to better manage their exposure, Swiss Re EMEA CEO Nina Arquint has told The Insurer TV.

“Alternative risk transfer solutions are coming to the forefront because innovation is required to address the risk environment we are seeing today. There is also the perspective on a more total view of cost of risk,” said Arquint

“I think if you look at the risk environment, and how demanding and challenging it is, it requires innovative approaches, and that's where alternative risk transfer solutions come into play.”

Arquint identified three key risks creating this complicated environment, which she sees as prompting firms to seek alternative risk transfer solutions: nat cat, energy transition and geopolitical instability.

“The most prominent are nat cats. We have to bear in mind that, in the first half of this year, we saw $60bn of insured losses globally and imagine that's 62 percent more than the 10-year average we have seen.”

“The other risk is the net-zero transition. We have a lot of conversations about that,” she said.

“And the third risk, I would also say the geopolitical environment. Again, not surprisingly, conflict, trade, war. And then, of course, the economy and the economic instability” said Arquint.

The alternative risk transfer solutions that Arquint sees companies being drawn towards are captives and parametric solutions.

“There is a conversation about risk retention. Do you use a captive? Do you use the virtual captive? How to best use it? There is also an increase in conversation about parametrics as an additional tool you can use, also around your captive,” she said.

This trend was highlighted at this year’s Federation of European Risk Management Associations (FERMA) annual summit where Arquint was being interviewed.

According to a global survey published by the association, 52 percent of respondents said their captives would become more important for managing property and business interruption risks over the next two years. Other risks where captives are expected to play a larger role include cyber, general liability, supply chain, and non-damage business interruption.

Cyber regulation

Another pressing concern for risk managers is the increasing regulatory complexity in cyber. Philippe Cotelle, head of insurance risk management at Airbus Defence & Space, recently called for simplification of these rules at FERMA’s annual summit.

Arquint echoed this sentiment, highlighting that regulatory risks in cyber especially around AI pose a growing challenge for clients.

“In artificial intelligence and algorithmic bias there are a whole lot of new topics, regulatory requirements. You know about the AI act in the European Union, where there is really a requirement for a comprehensive risk managing framework,” Arquint said.

Watch the full interview to hear more about: