The protection sector has received its biggest indication yet Swiss Re may be prepared to consider re-entering the guaranteed critical illness market, following the confirmation of a key appointment at the reinsurance giant.
It has been confirmed Alberto Izaga, who is currently ceo of GE Insurance Solutions, will become head of life and health products at Swiss Re if the merger between the two firms is successfully completed later this year, as anticipated.
A presentation to investment analysts by Swiss Re on Thursday 2nd March revealed Izaga would take up a major role with the reinsurance firm if the merger is completed with regulatory approval.
Industry sources say Izaga’s expected arrival at Swiss Re later this year could give the guaranteed CI market a crucial boost, as GE Frankona – current owner of GE Insurance Solutions – is one of the suppliers to the reinsurance market and there were concerns the merger could lead to the withdrawal of further CI capacity.
In contrast to this perspective, officials at Swiss Re say the work being conducted by the Association of British Insurers’ Critical Illness Working Party may bring reinsurers the additional security needed to continue offering coverage for the guaranteed CI sector – suggesting there could be improved CI capacity in the future.
Swiss Re pulled out of the guaranteed CI reinsurance market in May 2002, and this, for a short time, led to concerns about the availability of guaranteed CI product capacity, as well as pushing the cost of premiums up for consumers.
A spokesman for Swiss Re says Izaga’s appointment has no direct impact on the work Swiss Re is currently undertaking in respect of the guaranteed CI market, but the firm is reviewing the case for re-entering the CI market at the moment, as part of its continuous reassessment of product lines.
Tim Dickenson, head of UK communications at Swiss Re says the firm is “generally optimistic” about the future of the guaranteed CI market as there have been some changes which have encouraged its UK life and health operation to look at this sector again.
"Following the successful closure of our acquisition of GE Insurance Solutions, we will also review GEIS' book of business, and we are optimistic this will demonstrate positive messages on guaranteed CI," says Dickenson.
More importantly, he suggests there has also been a “change in supply and demand” of CI products which makes the risks and rewards of supplying critical illness cover potentially more attractive to Swiss Re.
Work is currently being conducted by the ABI with the aim of providing greater certainty in respect of key CI definitions and making the definitions more robust against medical developments and their potential impact on claims experience.
Work being currently being conducted by the ABI to provide greater certainty in respect of key CI definitions to make them more robust against medical developments their potential impact on claims experience.
This, coupled with more general market improvements in the standard of underwriting and claims, could make guaranteed CI viable for Swiss Re, suggests Dickenson.
“We are reviewing the guaranteed critical illness, and are optimistic we can continue writing this business in the UK market.”
Kevin Carr, head of protection strategy at Lifesearch, says consumers could see lower pricing of premium rates if a new reinsurer such as Swiss Re were to enter the guaranteed CI market.
“If future proofing is less of an issue for reinsurers, we may see a fall in premiums, and this could lead to an upturn in sales,” says Carr
Nick Kirwan, chairman of the ABI's Critical Illness Working Party, has welcomed Izaga's appointment and news from Swiss Re suggesting the current ABI critical illness review could contribute to the development of CI reinsurance.
"Swiss Re and GE Insurance Solutions are both involved in the CI Working Party, and it great the work is seen to make a significant difference to the sustainability of CI going forward.
"The move to appoint Alberto as head of life and health is to be welcomed and it clearly signals [Swiss Re and GEIS] are serious about their confidence in the market," adds Kirwan.
If you have any comments you would like to add to this story or would like to speak to its author about a similar subject, telephone Julie Henderson on 020 7968 4571 or email [email protected].IFAonline
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