"French insurer Covéa is set to buy PartnerRe for $9bn, turning itself into a major force in reinsurance and throwing down the gauntlet to local rival Scor."

FT today- David Keohane in Paris and Oliver Ralph in London

Interesting to see the consolidation of insurance and reinsurance and article last July in The Economist "The future of insurance is happening without insurance firms".

My take at the time is summarised below.

Despite increased take-up by rising middle classes in emerging markets, global premiums grew in real terms by only 1.3% annually over the period, to $5.2trn. The world economy managed twice that."

The Economist June 19th, 2019

Is lack of innovation a reason? 

 The Economist goes on to state: - "No insurer ranks among the world’s top 1,000 public companies by amount invested in research and development. Insurers allocate an average of 3.6% of their revenue to computing technology—about half the share that is typical for banks. In a study of 500 innovation topics across 250 firms Ninety, a consultancy, finds that many insurers are working on the same narrow set of ideas. Some of the noisiest, such as blockchain, are the least productive."

This is backed up by the InsuranceNexus "Connected Claims Report 2019". which identifies that investment is insufficient to effect connected claims transformation. The report goes on.. "Understanding of connected claims value is not matched by investment plans".

As claims is the main point of engagement between a carrier and its customers this suggests a serious innovation gap which may explain that global premiums growth is just half that of the world economy. Where there is a proven "protection gap" (i.e. insufficient insurance coverage) that is worrying for carriers.

The Economist describes re-insurers like Munich Re ready to tackle this gap and there is always the ever present threat of tech giants like Amazon and Google tackling that gap.

The Economist article can be read here by clicking on link in that blog.