Swiss Re says digitalization has enabled insurers to monitor, mitigate and price risks more efficiently, and insurers are aiming for a three to eight percentage point improvement in their loss ratios as a result of their digitalization efforts. It also says there are insurance protection gaps which need to be closed, and which can be addressed through innovation.

The company’s Digital Insurance Index suggests that advanced economies with strong infrastructure and research and development are better prepared for the digitalization of their insurance sectors but adds that emerging markets are catching up quickly.

“The index suggests that advanced markets with relatively strong physical infrastructure and where more people have access to the internet, have made the most progress in digitalizing their insurance sectors. Emerging markets have (the) most catch-up potential and over the last 10 years they have been doing so, fast,” the firm states.

Entitled The economics of digitalization in insurance, the study and report tracks the digital progress made by insurance companies in 29 sample countries. They say the study clearly shows a positive correlation between resilience and digitalization.

“Digitalization is a source of new growth, new risk and new efficiencies for the insurance industry. Digital value creation has led to an increase of firms’ intangible assets, including digital data. At the same time, increased dependency on digital infrastructure makes such assets more vulnerable,” the report’s authors write.

“With the shift from producing physical goods to providing information and services, the global value of intangible assets – which increasingly include digital assets – of listed companies has increased fivefold over the past 20 years to USD $76-trillion in 2021. Close to 80 per cent of that value remains uninsured.” The report goes on to say the Swiss Re Institute estimates that global cyber premiums will reach $16-billion in 2023 (all figures in USD), up 60 per cent from 2021, and $25-billion by 2026.

“The ongoing expansion of the digital ecosystem present business interruption and cyber risk pool opportunities. For example, we estimate that the global cyber insurance market has grown by 60 per cent over the last two years, and we forecast a more than 50 per cent gain over the coming five.”