Reinsurers will support the industry through change - Mark Senkevics

Mark Senkevics’s advice to insurance industry leaders is to be open to change, because for the next decade or so, we are going to see landmark changes in the industry.

Senkevics, who is Swiss Re Managing Director and Head of Australia and New Zealand, says the changes will be driven by tech and data, so insurance leaders need to be curious and open to new ideas.

‘You need to ask questions and sometimes they may be silly questions, but you still need to be able to ask them.’

A PEOPLE BUSINESS

With his 25th anniversary in reinsurance drawing near, Senkevics adds that people will remain an important part of the industry, so understanding leadership is critical.

‘In particular, having the capability to lead teams of people as they traverse enormous change is a key skillset required, but it’s a skill set that people can learn both through experience and various other opportunities.’  

Having been in the managing director role since 2010, Senkevics says his vision is to address one of the insurance industry’s biggest challenges — underinsurance.

‘There is still a significant insurance gap in Australia, in both the life and non-life insurance sectors,’ he says, ‘and in the last financial year, we’ve seen life industry premium volumes contract in real terms by 5.8 per cent.

‘That’s despite relatively good penetration through group insurance, but it suggests that significant underinsurance exists.

‘On the non-life side, we still see a high percentage of underinsurance in the event of natural catastrophes, so there’s still scope to grow.

‘Our vision at Swiss Re is to support that growth through the provision of capacity to the market, both for the life and non-life sectors, as well as through our insights and product development.’

DELVING DEEPER

Senkevics says that Swiss Re’s participation in the market is far more complex when you look beneath the surface.

‘For example, we provide supportive capital for mergers and acquisitions and develop new product ideas and solutions for clients.

‘As a business Swiss Re aims to lift its capability and that of the market in terms of intellectual property.

‘Building our people through personal development, learning and training is a key part of that effort.’

AN ITCH TO TRY SOMETHING NEW

An electrical engineer by qualification, Senkevics worked for Honeywell as a project manager for big manufacturing and power plants for about eight years before realising he’d reached the top of his learning curve.

An itch to try something else led to some research and study in the area of financial services.

‘It was the days when industry jobs were still advertised in the paper,’ he recalls.

‘I happened on an ad in the Australian Financial Review which literally said “Engineers, need a change?” I felt it was talking to me.’

But it was a reinsurance job and as for most people, reinsurance was not a sphere Senkevics knew much about.

‘I called up the head hunter, who actually now works with the reinsurance buyer of one of our clients, and said, “tell me about this reinsurance game.”

‘She replied, “Well its basically insurance of insurance, tell me about yourself, oh okay come on in and have a chat.”’

Soon after Senkevics joined SCOR as facultative underwriter.

SLIDING DOORS

In 2003, he accepted his first role with Swiss Re as Client Manager with responsibility for several high valued clients and went on to serve in a number of senior roles abroad including Head of Client Markets Korea and General Manager and Head of Property and Casualty in the then Taiwan operation.

Recently, he caught up with his old SCOR boss and mentor.

‘It was like sliding doors,’ he says.

‘I asked him if there had been much competition when I joined (SCOR), I’d never asked that question before.

‘He said, “Well it was tight, but I was pleased to have you on board!" and went on to say they would have been in trouble without me, so that was nice to hear.’

GROWING THE AUSTRALIAN BUSINESS

Senkevics says one of the achievements he is most proud of at Swiss Re is doubling premium income in Australia in a market characterised by its maturity and low growth.

‘For me that means we’ve become much more relevant to our clients despite the consolidation that’s taken place in the industry.’

He says the period following his return to Australia to take on the managing director role in 2010 has proved very challenging for the life insurance industry.

‘We’ve seen the crisis in 2013-14 where group business was re-priced and, in some instances, completely redesigned to achieve a much more sustainable outcome.

'More recently, we’ve seen the more profound impact on the sector of the Hayne royal commission.’

On the non-life side, Senkevics points to the experience of substantive natural catastrophes, such as the Christchurch earthquake, which saw the city being rebuilt with the support of the global insurance market.

‘It is always humbling to see Swiss Re's vision of "making the world more resilient" in action when you see an event like Christchurch.’

THE QUALITIES IT TAKES

From a personal standpoint Senkevics is proud of having lived and worked in Korea and Taiwan, which required flexibility among other important qualities.

‘I personally managed to learn and grow in those locations and I guess not standing still is the lesson,’ he says.

Of the Asian market, Senkevics observes that the pace of innovation and change exceeds that of Australia.

‘Some markets, for instance that of China, are really leading the world — in particular, when it comes to fintech and insurtech innovation.

‘Our traditional insurance clients in China are adapting to technology far more quickly than we are here in Australia and New Zealand. There’s much to learn from those markets.’

Given strong distribution markets in places like China, Vietnam and Thailand, Senkevics says technology can be adopted quickly in response to consumer expectations and companies making use of it demands that their suppliers keep up.

‘In China, for example, Alibaba has created a whole ecosystem around its offering. Insurers must be across the pace of that upgrade in terms of insurance product design, they simply can’t stand still.’

THE HAYNE EFFECT

Looking more deeply at the Hayne recommendations, Senkevics notes that the concept of claims as a financial service will need further consideration in terms of what it means and how it will be executed. He hopes it will be appropriately legislated.

‘The review of unfair contracts is an understandable out-take of the customer first proposition, but it may have some unintended consequences which need to be considered,’ he adds.

‘Proposed changes to commissions expected to occur in 2022 on both the life and non-life sides of the market will also have consequences in terms of the appropriateness of the advice that is provided to customers.

‘Will there be alternatives in place by that time to respond if commissions are removed?

‘For example, will financial advice through robots and chatbots provide an appropriate level of advice to customers for what most will agree are still complex financial products? So, there’s plenty to think through.’

‘I think there are some big questions to be answered and we need to strongly analyse the unintended consequences of any legislation that results.’

AN OPTIMISTIC VIEW

Despite his concerns, Senkevics says once the legislative process has been resolved, he’s optimistic that there will be an environment allowing the development of new, customer appropriate products that potentially need the support of reinsurers with a global reach and experience.

‘We will help support our clients in terms of responding to that possibility,’ he says.

‘Where reinsurers seem to be moving ahead quite quickly is in the area of data analytics — not necessarily understanding individual customers better because this may be constrained by privacy legislation.

‘Our strength lies in understanding cohorts of customers which will lead to much more effective product design and portfolio management.’

GREAT REINSURANCE DEBATE BREAKFAST

As a debater on the affirmative side for this year’s Great Debate Reinsurance Breakfast, Senkevics was loathed to reveal too much about possible arguments on the statement, ‘The insurance industry can’t afford more regulation’.

Suffice to say that increased regulation has a cost which is ultimately passed on to the consumer.

‘With the underinsurance issue in Australia, we need to think about what that means for the economy overall,’ he says.

May the best arguments win on the day.

Don't miss the Great Debate Reinsurance Breakfast.