Thursday, 22 August 2024 Reading time : 3 minutes

More than 300 years ago, in September 1666, a fire destroyed four-fifths of the City of London. The event went down in history as the Great Fire of London. Unlike today, there was no insurance in those days: those who lost their homes had to bear the financial burden themselves. Today, you can pay a premium to insure yourself against such risks. 

Today, insurance is available for almost everything, from accidents and cyber risks to personalised policies such as the £100 million policy on David Beckham's legs. Insurers typically calculate premiums based on an individual's risk profile and charge a fee that is higher than the expected loss. This model is profitable if claims are in-line with expectations. Today, insurers use their extensive data pool to better estimate the likelihood of a loss. In addition, they are exploring how to cover new threats, such as climate-related losses and cyber risks.

Personalised services through technological innovation
A major trend in the insurance industry is the use of data and technology to personalise services. Zurich Insurance, for example, has positioned itself in this segment with a focus on car accidents. Using artificial intelligence and real-time data from vehicles, the company is automatically notified when an accident occurs. This enables the insurer to provide tailored assistance – such as finding a repair shop, organising a towing service or providing a rental car – without the customer having to take the first step. The use of technology enables Zurich to speed up the claims process while providing a more accurate cost estimate.

Climate-related insurance
Climate-related insurance covers risks arising from climate change, such as extreme weather events or rising sea levels. As the impact of climate change increases, the demand for such insurance is likely to grow. Axa is also active in this segment, insuring customers against natural catastrophes such as hurricanes or droughts. 

Insurers such as Axa are in a unique position, as they often insure companies and projects that contribute to climate change, but also cover the consequences of climate change, such as damage caused by weather events. They are therefore trying to encourage their customers to behave in a more environmentally friendly way. For example, Axa offers training to raise awareness among its policyholders on how to reduce emissions. Thanks to their expertise in risk assessment and their influence on the companies and projects they insure, insurance companies can play an important role in climate-related issues.

Cyber insurance
As digitalisation increases, the risks associated with it are gaining the attention of the insurance industry. Cyber insurance, for example, allows companies to protect themselves against the consequences of data breaches or cyber attacks. As these threats are likely to increase due to technological change, the demand for cyber insurance is also expected to increase. The goal is not only to limit financial losses, but also to avoid regulatory sanctions and reputational damage.

Insurers have a strong interest in preventing such incidents. Munich Re, for example, has developed a cyber risk management programme that monitors threats, defines responses to incidents and assesses the resilience of systems. The aim is to help policyholders identify and address vulnerabilities.

Barrier Reverse Convertible on Insurers
7.5% p.a BRC on Zurich Insurance, Axa, Munich Re
Barrier: 70%
Swiss Security Number: 135 805 024

Indicative terms

 

Disclaimer
This communication is for marketing purposes. It is neither an offer nor an invitation to submit an offer, to purchase or to subscribe to securities and does not constitute investment advice. You should consult your advisors before making an investment decision. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, financial condition, development or performance of the issuer to be materially different from any future results, financial condition, development or performance expressed or implied by such statements. The present document has not been drawn up by the research department as defined in the rules of the “Directives on the Independence of Financial Research” published by the Swiss Bankers Association, hence these rules do not apply to this document. If securities are mentioned in the communication, the base prospectus, the final terms and any key information document may be obtained free of charge from Zürcher Kantonalbank, Bahnhofstrasse 9, 8001 Zurich, VRIS, and from www.zkb.ch/finanzinformationen.

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