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READING THE WEATHER I Sven
Plöger explains how meteorologists
assess natural disaster risks
WEATHER REVIEW I Storm docu
mentation at the Deutsche Rück
NatCat Center
DIGITAL WORKING WORLDS I How digitisation is changing the way
insurers work
OPTIMISTIC MOOD IN LIFE INSURANCE I People live longer and
pensions are shrinking – time for some
new products
BRAVE NEW DATA WORLD I Using
data mining to win new information
– can insurers do the same?
unDeR StaNdiNg RISK THE MAGAzINE OF THE 2015 ANNUAL REPORT
2015 in numbeRS
“�Operating�from�our�solid�position,�the�Deutsche Rück Group�can�continue�its�penetration�of�the�market�without�pressure�to�achieve�growth�and�with�a�clear�focus�on�sustainable�per-formance.�We�therefore�ensured�that�we�continue�to�exercise�discipline�in�our�underwriting�activities.”
DrArnoJunke,CEODeutsche Rück Group
3.8 %
Increase in gross premiums written in 2015. This repre-
sents an increase of almost €40 million to around €1.08
billion. The Deutsche Rück Group thus continued its
course of profitable growth in a market environment
characterised by oversupply of reinsurance capacity. The
Group succeeded in strengthening its position in its tar-
get markets and further expanding business relations by
acquiring new interests, increasing stakes and enlarging
its portfolio.
75.1%
Gross loss ratio in 2015 in the Group’s fire business, pre-
dominantly composed of proportional cessions in the fire,
business interruption and extended coverage lines. Con-
trary to the market trend, the gross loss ratio improved
(previous year: 82.6 %). Even in the homeowners’ and
windstorm insurance lines, burdened with losses from
natural disasters, claims expenditure was lower than in
the previous two years.
COVER IMAGE: Dark clouds over Cologne’s “Rheinauhafen”. At the end of March 2015, hurricane Niklas caused insured
losses totalling €750 million across Germany (source: GDV).
DEVELOPMENT OF LOSS RESERVES 2011 – 2015 in €m
DEVELOPMENT OF GROSS PREMIUMS WRITTEN 2011 – 2015 in €m
1,200
1,000
800
600
400
200
2011 2012 2013 2014 2015 2012 2013 2014 20152011
1,000
800
600
400
200
968.5 994.51,038.3 1,077.4
1,033.2
846.8 855.2934.9
975.6
902.4
1002
1412
CONteNtS
02 I READING THE WEATHER ARD weatherman Sven Plöger explains how meteor
ologists evaluate the risks of natural disasters.
08 I INDISPENSABLE WEATHER REVIEW in their storm documentation, researchers at the
Deutsche Rück natCat Center analyse the weather
and the damage caused by natural hazards.
10 I DIGITAL WORKING WORLDS Digitisation will permanently change the working
environment of the insurance industry. Sebastian
Diefenbach from Great Place to Work and Andreas
Thois of Deutsche Rück in interview.
12 I OPTIMISTIC MOOD IN GERMAN LIFE INSURANCE because people are living longer and state pen
sions are falling, lifelong pension products will
continue to grow in importance.
14 I BRAVE NEW DATA WORLD Google and Facebook have been winning quality
information through data mining for years. Can
insurers do the same?
CONTENTS
1 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
READING THE WEATHER
2
REPORT
Report I Meteorologists warn people about dangers posed by the weather. While
researchers have a good record of predicting some risks, certain weather conditions
continue to pose problems. TV weatherman Sven Plöger explains how meteorologists
evaluate the risks of natural disasters.
by Marvin Milatz
e
verything was as usual: the revellers threw
sweets, the “Tanzmariechen” danced, and colourfully
dressed jesters cheered the floats of the Rose monday
parade in Düsseldorf. Yet, this year everything was actu
ally completely different. because the annual carnival
parade held in many cities in north RhineWestphalia did
not take place on Rose monday but was pushed back to
a later date in march. by that time, carnival had already
been over for a month and revellers were obliged to dig
out their costumes all over again. The culprit for this dis
ruption was a strom, snappily named Ruzica. Dozens of
towns cancelled their carnival parades at the last minute.
“Stormforce winds could have torn the wooden planks
from the floats or ripped down barricades and hurled
them into the cheering crowds,” explains Sven Plöger,
meteorologist and TV presenter of the ARD’s weather
report. “The storm would have been perfectly capable
of creating that sort of disaster.” This fear was shared
by the heads of the festival committees, who wanted to
ensure that revellers were protected against this risk.
meteorologists from the German meteorological Service
(DWD) had warned of the storm in advance. Weather
researchers from the DWD and other institutions play an
important role in our society. They identify risks to life,
vehicles or buildings, which could be caused by natural
disasters such as storms, hail, rain and black ice. The
timely warnings they provide allow people in affected
areas to prepare themselves accordingly. meteorologists
indicate the likely weather conditions, statistically assess
information, and predict the scale of risk associated with
dangerous weather events.
This service not only benefits people in everyday
life. insurance companies also profit by being able to use
the data collected by meteorologists to more precisely
calculate insured risks and the associated premiums.
but accurately predicting the weather is no small mat
ter. meteorologists are faced with the mammoth task of
creating accurate forecasts about how complex global
relationships will unfold at regional level. this means
answering the question as to what consequences global
3
REPORT
climate phenomena will have on the
weather outside our own homes. de
spite solid statistical models, accur
ately predicting regional weather
and evaluating the associated con
ditions in advance remains an ex
tremely difficult undertaking.
The Rose monday experience is
a perfect example: not all cities in the
region decided to cancel their proces
sions. the Cologne Carnival Festival
Committee and the carnival asso
ciations chose to defy the storm and
went ahead with their parade. Certain
safety precautions were increased
and everything passed off without
event. No one was hurt and it was not
even particularly windy on the day.
The Cologne revellers were even able
to enjoy the odd ray of sunshine.
Does this mean that the meteor
ologists got it wrong and thereby
ruined the highlight of the “fifth sea
son” for tens of thousands of the re
gion’s residents with an exaggerated
warning? “Analysing weather data
after the event is, of course, always
easier than predicting it,” says Plöger.
His own team and the DWD mete
orologists actually predicted storm
Ruzica extremely accurately for the
state of north RhineWestphalia as
a force 10 storm. in specific terms,
this meant gusts of up to 106 km / h
across the region. “but storms are
not uniform phenomena,” Plöger ex
plains. There are always stronger and
weaker phases in a storm, which can
have extremely varied regional ef
fects. even if a storm is raging along
Düsseldorf’s famous Königsallee
boulevard, there is no reason to sup
pose that the same weather will pre
vail in the borough of Oberkassel on
the other side of the Rhine.
An analysis conducted by the Ger
man meteorological Service came to
the same conclusion: “At 11:11 a. m.,
while Cologne was only experienc
ing showers, the first lightning was
already flashing over the münster
land and south of the Cologne–Bonn
bight.” The Cologne area was spared
from severe storms. in Düsseldorf,
it initially looked like the same
picture, only for “a thunderstorm
accompanied by sleet and a severe
squall” to break over the state capital
at around 3 p. m. events proved that
the municipal leaders in Düsseldorf
had made the right decision. On the
other hand, so had their counter
parts in Cologne.
Sven Plöger needs to make such
considerations almost every day
before he explains to his television
viewers the risk that may be posed
by the forces of nature. even though
the effects of his decisions are often
much more minor than disappoint
ing tens of thousands of carnival
fans. “in my weather reports, i make
sure that people understand which
weather conditions pose a risk,” says
Plöger, “and why i interpret these
weather conditions the way i do.”
One example: during the summer,
the north Sea can be windless for
days. Then the wind freshens and
reaches force 6 or 7. in cases like this,
Plöger would place a warning sign
on the weather map and explain in
his report that sailors and swimmers
should take care because the sea had
recently been much calmer.
The German meteorological Ser
vice has a catalogue of warning crite
ria to which it must adhere. Similar
criteria even apply for precipitation.
Plöger, on the other hand, has some
leeway in terms of how he describes
weather conditions. This is because
he wants to tell his audience how the
weather will feel for them and how it
will affect their daily lives. “but this
scope does not lead to arbitrariness,”
he explains. “ultimately, the alert
levels are still important.” Thus, a
storm with a wind speed of 10 will
always get a windsock symbol as a
warning sign from Plöger – even if
the region had just been lashed for
days by force 12 winds and the wind
to human perception has signifi
cantly reduced in intensity. Plöger
still attaches great importance to de
scribing weather conditions in a way
that will be understandable to the
public. He points out that after sev
eral stormy days a force 8 wind will
naturally feel very different than it
does after a period of complete calm.
in his weather reports, Plöger
informs his viewers about far more
than the obvious climatic hazards
such as storms, hail and heavy
rain. many weather phenomena
“ Warning management has�been�greatly�improved� in�recent�years.”
SvenPlöger,meteorologistandTVpresenteroftheARD’sweatherreport
4
REPORT
1
3
4
2
1 Thunderstorms, squalls and heavy
rain move across the Rostock harbour.
2 A quarter of all the trees in the city
of Düsseldorf fell victim to the ELA
storm in June 2014. 3 Reed shoots
were encapsu lated in ice during a frosty
February in Lower Saxony. 4 Images
of devastation in the wake of the June
2013 flood extended far beyond the
city of Passau.
5 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
REPORT
SVEN PLöGER
can involve risks although they pass completely unno
ticed by most people. Some of these conditions are
even very popular. Heat waves, for instance, constitute
one of the most serious threats. While sun worshipers
look forward to sunny days in the park or at openair
swimming pools, “elderly people who do not regularly
think about the dangers of dehydration are extremely
vulnerable,” Plöger explains. in hot summer
months, more people die of heat shock than
are killed by storms and heavy rain through
out the year. Heat waves also represent a
hazard to motorists when the road surface melts and
forms waves.
Plöger directs his service primarily towards his view
ers. in this respect, the tasks of a weather presenter differ
from those of the severe weather experts at the german
meteorological Service. The forecasts of the DWD meteor
ologists often have economic consequences. For example,
Deutsche Rück uses the information from the German
meteorological Service for the company’s annual storm
documentation. This is an analysis of how the weather in
Germany behaved within a single year: how often there
were violent storms, how much sunshine there was, and
how much precipitation fell.
6
REPORT
Storm, precipitation and sunshine are weather phenom
ena that can already be very precisely predicted. “but that
does not work equally well for all weather conditions,”
says Plöger. There are still situations that present mete
orologists with ana
ly sis difficulties. in
particular, weather
risks of the kind that
can occur very lo
cally and can form
within a few hours
or even minutes.
These include things
like violent summer
thunderstorms and
fog banks in autumn
and winter that ap
pear out of nowhere
and severely com
promise visibility
for drivers. Meteor
ologists can detect
such weather conditions very well, but cannot pinpoint
the exact spot where a fog patch or thunderstorm will oc
cur. That is why they need to provide the earliest possible
warning of such weather conditions. “Warning manage
ment has been greatly improved in recent years,” Plöger
observes. Today, it is possible to issue weather warnings
for smaller individual regions rather than entire districts
or even states. However, Plöger hopes that warnings
will be even more precise in the future. That can only
happen with ever
more ac curate data
resources.
A more precise
data resource could
have helped at this
year’s Rose monday
events. it wouldn’t
have prevented
storm Ruzica from
sweeping through
north RhineWest
phalia, but perhaps
forecasters could
have more ac cur
ately determined
when and which se
vere weather phe
nomena would occur that monday. Where there were
serious concerns, the carnival could have been can
celled sooner. This would have avoided the situation
in Düsseldorf, where the final decision was not made
until the morning of Rose monday itself.
“In�my�weather�reports,�I make�sure�that�people�
�understand�which�weather�conditions�pose�a�risk.”
SvenPlöger,meteorologistandTVpresenteroftheARDweatherreport
7 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
REPORT
INDISPENSABLE WeATHeR ReVieW
Special I Who remembers when hurricane Anatol struck Germany? Or when
there was last such a powerful hailstorm as in July 2013? Who can assess
whether there has been an increase in natural phenomena such as tornadoes in
recent years? In their storm documentation, researchers at the Deutsche Rück
NatCat Center analyse the weather and the damage caused by natural hazards.
8
SPECIAL
Year after year, this virtually unri-
valled technical brochure provides
a comprehensive description of the
weather events and storms, thun-
derstorms and floods that have oc-
curred in Germany since 1997. With
this information, weather-related
events can be both meteorologically
classified and ranked in terms of the
damage they caused.
“Our readership is very varied and
includes primary insurers, rein-
surers, meteorological services
and university institutes,” explains
Thomas Axer, Head of Central Un-
derwriting Management and the
NatCat Center at Deutsche Rück.
“Almost all of them can use our bro-
chure for their daily work or archive
it for future reference to facts and
figures about weather history.” Sven
Plöger also stresses the importance
of storm documentation: “Compari-
son with historical events is critical
to being able to draw objective and
correct conclusions regarding cur-
rent or future natural hazard events.
In this context, an event archive like
the storm documentation makes an
important contribution,” observes
the meteorologist and climate ex-
pert, “especially against the back-
ground of a principle that has been
much discussed in recent years,
particularly with respect to major
weather events: i. e. whether these
might be associated with climate
change.”
What is the difference between this
brochure and thematically similar
industry publications such as the
natural hazard report of the Ger-
man Insurance Association (GDV)?
“Both works complement each
other perfectly,” says Thomas Axer.
“Our storm documentation has a
very strong scientific focus. We
explain in detail what happened
on the weather side, and particu-
larly, why exactly it happened in
meteoro logical terms. In their bro-
chure, our GDV colleagues place a
lot of emphasis on damage ratios
and statistics as well as on claims
management,” Axer explains. A
highlight of the current storm doc-
umentation 2015 is being able to
retrieve an interactive chart via the
Deutsche Rück website using a QR
code. This chart visualises and com-
pares Germany-wide temperature
data from recent years and decades.
In addition, users can download an
electronic version of the booklet
(which boasts more than 50 pages)
as well as all previously published
volumes, free of charge.
Deviation of monthly mean temperatures in
the years 2000 (inner ring) to 2015 (outer
ring) from the reference value 1981 – 2010
www.deutscherueck.de/temperatur
(inGerman)
9 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
SPECIAL
Interview I In the insurance industry, digitisation is generally viewed in the
context of business processes. However, it has an impact on the entire working
world and on society. Sebastian Diefenbach from the consultancy institute Great
Place to Work and Andreas Thois, Head of HR at Deutsche Rück, talk about some
of the implications.
The term “Industry 4.0” is on
everyone’s lips when it comes
to digital work environments.
What’s it all about?
Thois: The term “4.0” is derived
from the development stages of
modern industrial society. Digit
isation represents the fourth stage,
following in the wake of electrifi
cation, mass production and soft
automation. The term “industry”,
however, falls way too short. This
is because the service sector is also
deeply influenced by digitisation.
ultimately, all aspects of human
life are affected, so one could even
speak in terms of “Life World 4.0”.
Unlike the previous development
stages, this does not involve physi
cal changes. “Life World 4.0” is far
more an application and process
revolution.
What does that mean
for everyday work?
Thois: digitisation is reorganising
work and personal relationships.
Today, the internet is shaping our
relationships in the real and vir
tual world, and even relationships
between machines – in the current
jargon, the “internet of Things”. The
services sector is increasingly char
acterised by realtime experience
and the integration of real and vir
tual worlds. it’s not just your fridge
that can automatically reorder milk
at the supermarket. machines in
factories are able to carry out their
own maintenance, and autonomous
traffic via communicating vehicles
is no longer someone’s fantasy. This
applies to the business of insurers,
too. As a result, demands on employ
ees, structures and processes will
permanently change.
How will this development
move forward?
Diefenbach: At the moment, digit
isation mainly means increasing
complexity and dynamics, but also
uncertainty. in the future, gener
alised rules will be increasingly
unable to provide an answer to
new challenges. Some experts thus
expect a higher degree of qualifi
cation, others a deskilling of the
workforce. increasing individual
isation, temporalisation and frag
mentation of work processes will
play a crucial role.
SEBASTIAN DIEFENBACH I Team leader at the
consultancy institute Great Place to Work
DIGITAL WORKinG WORLDS
10
INTERVIEW
What will this mean for companies
and their employees?
Diefenbach: in future, professional
ism will become increasingly im
portant, as will the ability to solve
problems and to possess a strong
personality. employees will need
these characteristics to keep up
with erratic work processes and
changing situational needs and ap
ply their skills to the situation. This
can make new working time mod
els and processes necessary, which
are only enabled by digitisation in
the first place. For example, mobile
working and the home office have
already become commonplace for
many people.
Thois: the goal is lifelong learning
within a learning organisation. in
this model, managers will become
“facilitators” who strategically en
sure the appropriate working con
ditions for continuous learning, but
who in professional terms will be
increasingly restricted in their abil
ity to intervene and control. These
tasks will be steadily adsorbed into
the responsibilities of specialised
staff. The development of system
confidence, resilient relationships,
loyalty and team spirit is therefore
our most important task.
What consequences does this have
for the insurance industry?
Thois: So far, primary insurers have
been significantly more affected by
“Work World 4.0” than reinsurers. in
the consultation stage, concerning
the contract and damage claims, pri
vate customers in particular are in
creasingly choosing to access digital
services because they already know
how to deal with digital solutions
from other areas of life.
Diefenbach: These changes and the
continuously increasing volume of
information available have made
cultural change a necessity. Com
panies need to be faster and more
flexible and better able to share and
network their knowledge internally.
They must become learning organ
isations that allow “trial and error”.
When you increasingly depend on
speed and innovation, a rigorous
“zero fault culture” becomes unten
able. instead, success depends more
and more on “lessons learned”.
How is Deutsche Rück approaching
these challenges?
Thois: in future, it will be crucial to
be able to respond appropriately
and quickly to uncertain situations.
This not only requires the company
to be open to innovative solutions,
but also calls for effective personnel
work. if we can do this, we will be able
to strengthen employee loyalty and
simultaneously remain attractive
to new applicants. When mistakes
happen, we want to learn from them.
this was one of the findings of our
latest employee survey.
The survey was part of a larger evalu-
ation process, the results of which
formed the basis of Deutsche Rück’s
participation in the “Germany’s Best
Workplaces” competition run by Great
Place to Work. How did Deutsche Rück
perform?
Diefenbach: along with those of
the other participating companies,
the results of Deutsche Rück’s em
ployee survey were incorporated
into the evaluation of leadership,
confidence, team spirit and loyalty
to the employer. To this was added
the “culture audit”, which looks at
HR offerings and services aimed at
supporting and developing employ
ees. Altogether, over 600 companies
permitted us to test them in the con
text of our latest benchmark compe
tition. We awarded our quality seal
to 100 companies, one of which was
Deutsche Rück. This is a result the
company can be very proud of as it
clearly illustrates Deutsche Rück’s
efforts to guarantee an especially
trustworthy, beneficial and attractive
workplace culture.
Thois: We view the results of the em
ployee survey and culture audit as
an important basis to be prepared
for the challenges of the digital
working world.
ANDREAS THOIS I Head of Deutsche Rück’s
HR department
11 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
INTERVIEW
Analysis I The German life insurance market is facing fundamental change. The
prolonged period of low interest has put increased pressure on the classic prod-
uct environment. In the face of declining bonuses, the future viability of the life
insurance is currently a major subject of public debate. At the same time, given
the decline in state pension benefits, the need for additional pension provision
is more acute than ever. And because people are living longer, products with
lifelong pension payments will become even more important in the future.
W
here is the german market heading in the
face of these challenges? Life insurers are responding to
changing market conditions with new product concepts.
there is a widespread sense of optimism – the market is
currently more creative than ever. Two key requirements
need to be fulfilled:
1. The guarantees without which pension products can
hardly continue to sell in Germany must be adjusted to
the changed interest rates.
2. The investment must break new ground to achieve the
necessary pension returns in the future in view of the
interest rate decline.
in addition to unitlinked products with appropriate in
vestment and guarantee components, market develop
ment is currently dominated by “new classic” concepts
in particular. They rest on the proven calculation bases
of German life insurance: the collective principle with
the investment in the cover pool. The compensation of
OPTIMISTIC MOOD IN GeRmAn LiFe inSuRAnCe
fluctuations in the portfolio and over time is the key ad
vantage of the classic calculation model, which no other
form of pension can offer. What is new about the “new
classic” is a reduced guarantee and a higher potential
pension yield, depending on how the product has been
designed. in the current capital market situation, the
sort of interest performance guarantee offered in the
past is barely tenable any more.
Taking a look at the “new classic” products avail
able on the market up to now shows that a contributions
guarantee has established itself as a standard feature.
Other forms of guarantee level are of course possible:
for example, only a certain percentage of contributions
alongside a returnoriented investment. The departure
from the previous guaranteedinterest model provides
insurers with more room to manoeuvre in terms of mak
ing investments.
This has different effects on the products themselves.
either the companies can take greater risks and achieve
higher returns with their own investments in the future;
12
ANALySIS
in this case, the funds remain wholly in a classic cover
pool. Or they can invest any surpluses over and above
the guarantee in index investments, for example. ulti
mately, the new products still offer guaranteed lifetime
minimum pensions. the level of these guarantees is de
termined when the policy is first written, which means
that the policy owner may ultimately enjoy a higher pen
sion as the result of positive investment performance.
STRONG PARTNERS ARE REqUIRED FOR A CREATIVE NEW BEGINNINGAlongside the new forms of classic pension policies,
biometric risks will increasingly come into focus in the
future. This area includes innovative product concepts
such as functional disability insurance, which combines
elements of accident insurance and life insurance. The
German market is currently experiencing considerable
momentum in the biometric business as well. it is no
longer sufficient to rely on the proven product concepts
of the past. in the wake of the interest rate crisis, creativity
is needed to succeed in the particularly attractive market
for risk products.
For German life insurers, creating the conditions for
this new product world against the backdrop of declining
investment income and high expenses for additional in
terest provision will require great efforts. To achieve this,
they will in the future need increasingly strong partners
who can assist them in market monitoring, product devel
opment and the establishment of accounting principles.
not all primary insurers will be able to do everything
themselves and increased cooperation is set to shape the
life insurance market in the years ahead. in the process,
the role of reinsurers will change. They will be required to
act not only as pure risk bearers, but increasingly as prod
uct optimisers who can provide their primary insurance
clients with a complete consultancy and service package.
13 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
ANALySIS
DR STEFAN KüHN I Mathematician at Codecentric
S
ome risks are very opaque. People wish to insure
themselves against these risks – which is what creates a
market for insurers. but insurance companies face the
problem that a lack of information makes it difficult to
calculate an insurance product. Cybercrime is a recent
example and constitutes one of the new major risks. Ac
tuaries find it difficult to calculate an exact probability of
the occurrence of a digital crime. There is no longstand
ing claims history to use as a basis for calculation. And
in cases that have already occurred, it is hard to measure
the amount of the damage.
Policies that lack a solid basis for calculation
have long caused a headache to actuaries. This is why
Deutsche Rück wanted to shed some light on the dark
ness. in the middle of last year, the company conducted
an experiment that was unconventional for the insurance
industry. “We wanted to test whether we could synthesize
a claims history for an insurance portfolio by applying
new iT methods to widely accessible data,” explains
Dr Oliver Lamberty, head of Deutsche Rück’s liability,
accident and motor insurance division (HuK).
BRAVE NEW DATA WORLDAnalysis I Internet companies like Google and Facebook have been winning
quality information from non-proprietary data for years. Can insurers do the
same? This question prompted Deutsche Rück to run a data mining experiment –
thereby gaining important insights into the future of information gathering.
14
ANALySIS
NEW INFORMATION SOURCE FOR INSURERSLamberty’s idea is not without precedent. For several
years, major American internet companies like Google,
Facebook and the videostreaming service netflix in par
ticular have been looking at how to win new insights by
analysing large amounts of data. The relevant specialists
within these enterprises are called “data scientists”. Their
task is to capture and combine thousands of data points
from various sources, known technically as data mining.
Deutsche Rück wanted to adapt this procedure for the
insurance industry. Lamberty and his team chose vehicle
recall insurance as their test object. This is a form of in
surance used by suppliers to the automotive industry (see
box) and assumes the costs in the event that an insured
product triggers a recall. As with cybercrime insurance,
mathematicians also find it difficult to determine claims
DR OLIVER LAMBERTy I Head of Deutsche Rück’s liability,
accident and motor insurance division (HUK)
probability for this form of insurance. That is because
there are only a few cases each year. but if thousands of
vehicles need to go into the repair shop at a single stroke,
the cost of damages is instant and large.
Deutsche Rück launched the innovative project to
gether with mathematician Dr Stefan Kühn from iT com
pany Codecentric. by extracting information from various
data sources, they succeeded in generating new knowl
edge for the first time, away from conventional informa
tion sources such as selfreports by policyholders or data
from the settlement of claims.
Although the project was only a first test run in data
mining, Deutsche Rück was able to establish some statis
tical parameters in more detail for the first time, such as
how often certain car parts triggered a recall. “We now
understand the risk better than before,” says Lamberty.
“If�insurers�want�to�expand�into�new�markets� or�insure�new�risks,�they�can�use�data�mining� to�gain�a�preliminary�estimate�of�the�risk�
they�wish�to�insure.”
Dr Oliver Lamberty
15 DEUTSCHE RüCK I UNDERSTANDING RISK I THE MAGAZINE OF THE 2015 ANNUAL REPORT
ANALySIS
AN UNUSUAL APPROACHLamberty’s conclusion after the experiment was that
the structured use of nonproprietary data could be ex
tremely helpful for insurers in future. “if insurers want
to expand into new markets
or insure new risks, they can
use data mining to gain a pre
liminary estimate of the risk
they wish to insure,” Lamberty
explains.
However, the analysis of
freely accessible data is not
without its pitfalls, as the
Deutsche Rück project also
revealed. “The information
from the various data sources
was not fully compatible,”
says Kühn. For example, the
names of car models and com
ponents or the recall period all
varied. “initially, we needed
to expend a lot of effort on structuring the data.”
This is unfamiliar territory for insurers. in the past,
they worked extensively with structured data, which gen
erally came from their inventory management systems.
To generate new information from unstructured data in
the future, they need to explore new paths that they have
not come across before. “Data mining is still very explora
tory,” says Kühn. “it requires a very different approach
than insurers are familiar with.”
TAKE A CRITICAL VIEWin the course of the experiment,
Lamberty and his staff discov
ered the brave new world of in
formation gathering. if primary
insurers want to look at data
mining, they should assemble a
small group of interested people
within the company and start
their first experiments. “This
will create major opportunities
for companies,” says Lamberty.
but insurers should also be pre
pared to take a critical view. “in
wellbalanced insurance port
folios with a welldocumented claims history – even
using new methods – we will not find anything better
than an inventory of conventional data can provide.”
MOTOR VEHICLE RECALL INSURANCE I If hundreds of thousands of vehicles need
to be repaired due to a faulty airbag, a broken brake pedal or a failed IT switch
node, the automakers rarely pay the costs themselves. They seek remedy from the
supplier who manufactured the defective part. This is what makes vehicle recall
insurance attractive to many companies involved in the automotive industry.
16
ANALySIS
COMPANy DETAILS
Published by
Deutsche Rückversicherung Aktiengesellschaft
Hansaallee 177, 40549 Düsseldorf
P.O. Box 290110, 40528 Düsseldorf
Germany
Phone + 49 211. 4554 - 01
Fax + 49 211. 4554 - 199
www.deutscherueck.de
Design
FIRST RABBIT GmbH, Cologne
Printed by
Print Media Group GmbH & Co. KG, Hamm
Picture credits
Felix Inden (cover)
Benjamin Wolf (2 / 3, 8 / 9)
M. Kringel (5, above left)
Andreas Endermann (5, above right)
Peter Kneffel / ddp (5, centre)
David Hecker / dpa (5, below)
If reality shocks, we absorb.
www.deutscherueck.com
Over six decades of managing risk has taught us that the reality of business life is not always
a smooth road. Fortunately, we have also consistently demonstrated that exceptional events
can be successfully handled. Since 1951, we have specialised in intelligently minimising risk
to ensure that our clients emerge from such situations in sound financial health. To which we
add our outstanding technical expertise, obsessive attention to detail and rock-solid financial
stability. So if you would like to ensure that you are prepared for any unexpected jolt that
tomorrow might bring, you can rely on Deutsche Rück.
Deutsche Rück. Reinsurance made in Germany.
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