So the question is, how will it use this power and what effect will it have?At a global level, the acquisition seems to be a match made in heaven. The opportunities arising from the acquisition in the US, Asia and Europe are vast. In fact some of the opportunities already identified offer risk diversification through a wider spread of product types, countries and corporate clients, capital and cost efficiencies, and cross-selling. Here in the UK one big move that has been announced is Swiss Re’s intention to re-enter the reinsurance market for guaranteed premium critical illness insurance. It’s this type of reinsurance that allows insurance companies to offer CI with guaranteed premiums to consumers. GE Insurance Solutions has been the major player in this reinsurance sector since Swiss Re spectacularly pulled out of the market a few years ago. Since its exit, Swiss Re has made no secret of its negative feelings about the CI market in general and guarantees in particular. The UK divisions of the merging firms have held diametrically opposed views on guaranteed CI so there will surely be some tensions as the two become one. Given these differences, Swiss Re should be applauded for its brave decision to re-enter the market. Its presence will add welcome support and stability to a market that has been through considerable change. This was driven mostly, it must be said, by Swiss Re’s original exit which caused a fundamental shift in the supply and demand equation and almost brought the market down. Premiums went up significantly, we saw a reduction in the maximum cover and upper age limits and a tightening of conditions. While these changes might not have been immediately recognised as good news for consumers, they did at least help to put the product on a firmer long-term footing and helped ensure this valuable product would continue to be available. Arguably, many of these changes would not have happened without Swiss Re leaving the market. And given that the product is in better shape than ever before from a reinsurance perspective and further improvements in the pipeline from the ABI consultation on CI, it looks as though Swiss Re feels the time is right to re-enter the guaranteed CI market. It’s never easy to do a U-turn so we should applaud Swiss Re all the more for the brave but positive decision it has now formally announced. Given the twists and turns of this story so far, everybody in the market will be hoping we’ve reached an ending whereby intermediaries and consumers live happily ever after. If we were to get an alternative ending with a twist whereby Swiss Re changes its mind one more time and decides that the newly acquired GE will stop writing guaranteed CI after all, it would turn this fairy tale into a horror story. Without GE it is unlikely there would be enough reinsurance capacity for the guaranteed CI market to survive. This would be desperately bad news not only for consumers and intermediaries but also for the protection market as a whole. Thankfully, Swiss Re has promised everyone a happy ending in which we can look forward to a competitive guaranteed CI market with all the benefits for consumers that this will bring. Well done Swiss Re, the protection market is relying on you to keep this promise.
- Top trends
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