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Hannover Re CEO: Protection gap is a reputation risk for insurance industry

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Hannover Re CEO: Protection gap is a reputation risk for insurance industry

The gap between economic losses from catastrophes and the amount the insurance industry pays is "potentially a reputational risk for the whole industry," according to new Hannover Re CEO Jean-Jacques Henchoz.

Speaking to journalists in Monte Carlo on Sept. 9, Henchoz, who took over from Ulrich Wallin in May, said narrowing the so-called protection gap "should remain a big imperative for the whole industry — primary insurance and reinsurance."

He said that on one hand, natural catastrophe business is growing, representing an opportunity for insurers and reinsurers. But he added: "On the other hand, that gap has been growing in the past few years and that is a concern."

Insurers and reinsurers have long talked about closing the protection gap, which is large and widening. Speaking to journalists in Monte Carlo the previous day, Swiss Re's reinsurance CEO, Moses Ojeisekhoba, said the average economic loss from natural catastrophes over the past 10 years has been $200 billion a year, of which "less than half" is insured. He also noted that over the almost 50 years Swiss Re has been tracking economic and insured losses, the growth rate of economic losses has outstripped that of insured losses.

Henchoz also sees opportunities to grow Hannover Re in an improving pricing environment. While noting that "there is a way to go" still on pricing, and that the company would put profits before growth, he said there was potential to broaden a number of its customer relationships and that it was seeing some new business opportunities.

He said it was unclear how much there would be in 2020 given the pricing environment, but added, "I think we are heading towards some growth in a number of regions."

One area for possible growth is the Asia-Pacific region, Henchoz said: "We have been successful there but I see some good potential to team up with customers in the Asian continent, particularly China."