Munich Re scouts for ideas with the launch of innovation lab in Beijing
Munich Re has opened an “innovation lab” in Beijing’s 798 art district as the German reinsurer
scouts for Asian start-ups to partner innovative ideas disrupting the insurance sector.
The Beijing lab is the world’s largest reinsurer’s first such innovation hub aimed at bringing in new ideas from digitisation of sales channels to risk management and loss prevention.
“The Beijing lab is a place for internal staff to develop ideas or collaborate with partners like start-ups or clients,” Munch Re management board member Ludger Arnoldussen told the South China Morning Post.
The company’s other innovation lab is in Princeton, where the insurer’s US subsidiary is located.
The partners Munich Re is looking for could be financial technology start-ups or established internet companies like Alibaba, he said. “We only want to find discussion partners. They do not need to come with something clear-cut but just with a direction. If they want to turn our business ideas upside down and give us new inputs, we would welcome that.”
New technologies would erode revenue generated by some traditional products, and making use of such technological advancements would allow Munich Re to develop new products and expand coverage to previously underinsured or new areas because of better risk forecasts, Arnoldussen said.
Citing self-driven cars as an example of disruption in traditional insurance products, he said: “You can expect fewer accidents when more self-driven cars are on the roads as many accidents are caused by human errors. Then insurers can no longer charge the same as we do now as claims will go down as well as premium income. Technology will change a lot of things in the auto insurance field.”
Munich Re’s premium income from innovative products last year came to €400 million, Arnoldussen said. Of that, €100 million came from cyber security insurance.
“It’s a new risk and not easy to insure, but it’s one interesting example of how we can figure out ways to manage claims and do risk management with technologies and big data,” he said.
The insurer has been bringing in new ideas from Silicon Valley to China and other Asian markets. Working with a start-up from the US innovation hub focusing on pandemic modelling, Munich Re was able to provide insurance to tourists to South Korea amid the outbreak of the Middle East respiratory syndrome that broke out last year.
The modelling technique, which helps forecast how a pandemic could develop and in what direction, can be applied to other Asian markets for similar diseases such as bird flu, he added.
The sensor technology used in smart homes is another area Munich Re is focusing on as it could help detect water leaks or fires.
Arnoldussen said the potential for innovative products is huge in China as insurance penetration rate is still low in the country and the number of internet users huge. “It’s important to have a China or Asia focus on the things we do as the rules of the game are a bit different here.”
He cited the example of products insuring flight delays using big data and technology to price risks more reasonably.
“Flight delays are a big problem in China and people will like such products. For us, we have to look at the culture and what people like,” Arnoldussen said.