Risk assessment

Emerging risks directly affect our treaty portfolio, not only in the form of potential risks (e.g. liability issues) but also in the form of opportunities (such as those associated with increased demand for reinsurance products). Close coordination therefore takes place between the working group on "Emerging Risks und Scientific Affairs" and Hannover Re's central risk monitoring function. In addition, the evaluation results are integrated into the quarterly internal risk reports, which serve to keep the Executive Board – among others – updated on material risk assessments. The insights and risk assessments of the working group are utilised Group-wide in order to determine any measures that may be needed. A committee was set up in January 2015 to safeguard this process. The committee supports the coordination and implementation of recommendations relating to emerging risks. In this way, we ensure that the recommendations made by the working group are factored into underwriting decisions. The committee also takes responsibility for the fine-tuning of position papers and the assessment of new emerging risks.

In addition, our "Future Radar" working group evaluates trends and issues of the future (e.g. weather derivatives, shortage of resources, healthcare market, cyber crime) and determines how any identified business opportunities can subsequently be acted on through marketable primary insurance and/or reinsurance products. For this purpose, specific subject fields are explored by interdepartmental and interdisciplinary teams and analysed with an eye to business potentials that can be leveraged.

Climate change

Climate change, defined as naturally occurring changes in climatic conditions or those caused by human activities, constitutes a major environmental risk. Owing to the multidimensional nature of the topic, Hannover Re draws on the insights of not only insurance specialists but also geophysicists, meteorologists, seismologists and mathematicians. They evaluate the natural hazards, analyse their economic impacts and monitor them, inter alia on a regional basis.

As a member of the International Insurance Law Association (AIDA), we also regularly share insights with insurers and reinsurers in the "Climate Change" working group on coverage concepts and on loss events that may be attributable to climate change. By way of natural hazards modelling, for example, risk management standards are developed for dealing with natural disasters, as illustrated by the models for managing windstorm, flood, hail and earthquake risks. At the beginning of 2015 we successfully completed the development of a simulation model for the earthquake risk in Germany.

In the field of natural hazards modelling we cooperate with universities and research institutions and provide financial assistance to appropriate initiatives. For example, Hannover Re has been a long-time supporter of the Geo Research Center in Potsdam and the Global Earthquake Model Foundation (GEM), whose mission is to improve public understanding and awareness of earthquake risks worldwide by promoting science and establishing consistent standards as well as to reduce the impacts of earthquakes on populations and concentrations of values.

Hannover Re is working to build an extensive knowledge base for the evaluation of climate risks in cooperation with universities, government organisations and competitors. The digital library already encompasses more than 300 scientific papers and will be further expanded. They tackle a range of subjects, including the effect of rising temperatures on natural disasters and the correlation between natural catastrophe events across different regions.

In addition, experts from Hannover Re regularly attend conferences – including the United Nations Conference on Climate Change in 2015.

Services and applications

Our subsidiary E+S Rück, which bears responsibility for German business, offers various services and applications so as to be able to identify potential risks for its clients. These include, for example, simulation models used to calculate and capture (potentially extreme) events and the associated losses such as "es I bebt" and "es I hagelt" (for the earthquake and hail risks respectively) as well as a service offering for underwriting of the flood risk in Germany ("es I flutet"). Similar tools have been developed to assess and evaluate accident risks ("es I unfallt"). In the area of functional disability insurance E+S Rück assists its customers with the aid of the underwriting software "es I meRiT" and thereby makes it possible to cover accident and other disability risks by means of risk-specific adjustments in terms and conditions – even for individuals with an already impaired state of health.

E+S Rück works with cooperation partners such as the rehab service provider RehaAssist so as to enable severely injured policyholders to recover as comprehensively and quickly as possible. Another cooperation partner is the Malteser aid agency, which helps insurance customers who have been injured – for example after an accident – to reintegrate into daily life by providing a range of assistance services.

In life and health reinsurance we want to offer our customers broad and individually tailored support that extends beyond pure risk assumption to include the successful provision of a diverse range of services. In the field of medical Underwriting we discuss topical and relevant medical issues through various channels, including our newsletter "ReCent Medical News". Similarly, when it comes to our electronic underwriting manual "hr | Ascent" – which gives our customers comprehensive support for individual risk assessment – we focus on continuous revision and enhancement so as to be able to map the latest market developments at all times. Furthermore, our international network enables us to quickly and directly transfer innovative new reinsurance solutions to other markets.

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