Swiss Re Corporate Solutions boss’s reality check for Australia as natural disasters decimate 

Swiss Re Corporate Solutions boss Andreas Berger’s message to Australian businesses is: plan for worst-case scenarios.

Swiss Re Corporate Solutions chief executive Andreas Berger. Picture: John Feder

A few years and a couple of lockdowns late, Swiss Re Corporate Solutions chief executive Andreas Berger has finally made it to Australia ready to spread the word to clients: plan for disaster before it strikes.

Mr Berger, who took on the reins of the Corporate Solutions business in 2019, has made it his mission to visit all the offices of the sprawling global insurance giant.

But the outbreak of Covid-19 resulted in his March 2020 trip to Australia being cancelled with just three days’ notice.

Since then, the Australian insurance scene has weathered a string of catastrophes – the pandemic, fire, flood, earthquake and storms – which have smashed businesses and households alike.

Unlike the somewhat better known reinsurance arm of Swiss Re, the Corporate Solutions business writes cover in its own right for some of the world’s biggest companies.

Swiss Re Corporate Solutions’ Australian customers include some of the country’s biggest corporates, such as Lendlease, Star Entertainment, Wesfarmers and South32.

Swiss Re Corporate Solutions chief executive Andreas Berger. Picture: John Feder

Mr Berger said it was clear, based on his discussions with business, that the rising threat of climate change, geopolitical risks and supply chain disruptions were concerning management.

“They’re not separate, they’re all interlinked, there are dependencies between these kinds of risks,” he said.

“It’s fair to say we’ve seen an increase of those events, and severity of those events increase.”

The cost of conflict can be real. Corporate Solutions has booked a $US129m ($185.4m) reserve for losses which might arise from the Russian invasion of Ukraine.

This was on top of $US102m for natural catastrophe losses.

Swiss Re says Australia’s place in its massive natural catastrophe losses in the half is 50 per cent above its decennial average, which topped $US938m in the half.

Natural disasters such as significant flooding in parts of Queensland are becoming more prevellant. Picture: Getty Images

Mr Berger said Corporate Solutions was aiming to pull back losses by bringing its expertise to clients, advising them on better construction and lifting resiliency across supply chains.

What keeps me awake at night is everything that concerns the customer,” he said.

“The customer is the one who is impacted by the natural catastrophe events; that translates into business interruption and that’s the biggest cost.”

Mr Berger took the helm at a time when the Corporate Solutions business had mounting losses and premiums failing to cover outgoings. Swiss Re is seeking to further lift returns, despite the improvement of the business.

Corporate Solutions earned $US220m in the first half and plans to lift its return to a 95 per cent combined ratio – up from the 93.2 per cent delivered in the half.

Bushfire continue to challenge corporate Australia’s ability to prepare and respond.

This means the business will need to improve returns on its $US2.9bn of net premiums or slash losses.

Mr Berger said inflation was proving problematic to pricing cover for customers, but Swiss Re’s global footprint had given the business experience with how to handle it.

“You have certain parts of the world that live with inflation, that’s their day to day,” he said.

“In this market situation we’ll definitely see that some of the changes in our reserving on the corporate solutions side.”

Mr Berger warned that if businesses were not able to respond to insurance premium increases it would result in a shortfall on insured claims.

“That’s a gap you have to close,” he said.

“If the prime insurance market can’t push through the rate increases at the end customer, this will end up in a problem.”