In the summer of 2020, a once-in-a-hundred-year drought hit western Liaoning. Although the lack of water irrigation has led to large-scale crop yield reduction and failure, local farmers still remember it. According to statistics, by late July of that year, the affected area of crops in western Liaoning had reached nearly 6 million mu.
Because the disaster lasted for a long time and covered a wide area, farmers were severely affected, and insurance claims occurred frequently. However, insurance companies rely on the traditional way of surveying and determining losses, and neither the timeliness nor the accuracy of insurance claims can keep up with the development of the situation. At the same time, the existence of moral hazard also increases the difficulty of insurance claims. On the other hand, the uncertainty of time and space in the development of drought has also brought great challenges to the disaster relief work of government departments. The government and industry have an urgent need for objective, large-scale, high-spatial-resolution, and quantitative drought loss assessment.
“According to the characteristics of the Chinese market, we developed the ‘Xinrui Zhinong’ agricultural risk management platform to provide one-stop solutions, including weather index product design and real-time crop growth monitoring, to help China’s agricultural production improve risk management capabilities.” Ivan Gonzalez, who was born and raised in Colombia, an important agricultural country in South America, said. He is the newly appointed President of Swiss Re China and CEO of China Reinsurance in July 2022. Founded in 1863, Swiss Re is headquartered in Zurich, Switzerland, with 81 offices around the world and approximately 13,200 employees. Since China’s insurance market opened to the outside world, this Fortune Global 500 company has become one of the first batch of foreign-funded reinsurance companies to enter the Chinese market. It set up representative offices in Beijing and Shanghai in 1995 and 1996, respectively.
In response to the drought challenge in western Liaoning, Swiss Re used satellite remote sensing technology to extract high-resolution drought areas and quantify losses in the affected areas, providing a scientific and objective reference for disaster relief for government departments and accurate claims settlement for the insurance industry. The main principle of satellite remote sensing technology is to use the spectral attributes of plants in different states and comprehensively analyze the growth state of crops with the help of remote sensing observation data, so as to extract the range of crop damage, and it can be accurate to the affected area of each town.
Obviously, the application and popularization of new technologies are bringing about a revolution in the field of agricultural insurance. As a participant in agricultural insurance for many years, Swiss Re will undoubtedly make further use of technology as an “accelerator” in the context of rural revitalization in China. “From the perspective of insurance premiums, China is currently the world’s largest agricultural insurance market. We expect huge growth potential in this field in the future.” Kong Yifeng made no secret of his “ambition” for China’s agricultural insurance market. This is his first exclusive interview with the media since he took charge of the Chinese market.
Since the pilot program of central policy agricultural insurance was launched in 2007, the scale of agricultural insurance in China has grown rapidly. According to the statistics of the National Agricultural Insurance Data Information System, the scale of my country’s agricultural insurance premiums in 2021 will be 96.518 billion yuan, a year-on-year increase of 18.4%, providing risk protection for 188 million rural households with a total of 4.78 trillion yuan. Among them, the central government allocated 33.345 billion yuan in premium subsidies, a year-on-year increase of 16.8%.
In China, government departments are the makers and supporters of agricultural insurance policies, so the development of the agricultural insurance market is obviously inseparable from the participation and guidance of the government. “In this field, we have a lot of room for cooperation with the government. For the governments of various places and departments, we will learn from them and understand the local characteristics and needs of the market, and then cooperate with them to develop solutions based on local needs. .” Kong Yifeng said.
Reinsurance is also called “insurer’s insurance”, because insurance companies generally transfer all or part of their risk responsibilities to reinsurers by signing reinsurance contracts with reinsurers. Compared with the direct insurance companies that face thousands of households, the reinsurance industry that mainly serves insurance companies is obviously smaller, but the existence of reinsurance is the key to the prosperity and development of the insurance market, because it is the ultimate risk bearer. Going back to the mid-19th century, it was catastrophe losses that prompted the emergence of specialized reinsurance companies. Since the beginning of the 20th century, the increase in catastrophe risks has promoted the development of new reinsurance methods. At the same time, technological progress has also led to the emergence of emerging risks, which has increased the demand for professional reinsurance.
Swiss Re’s breakthrough in agricultural insurance reveals an important trend, that is, the customer management philosophy of the world’s leading reinsurance companies has already surpassed the scope of traditional direct insurance companies and extended to governments, non-governmental organizations (NGOs) and even individual customer groups , relying on its strong data analysis and product innovation capabilities, it continues to expand new boundaries in potential areas such as catastrophe risk and social management, and gradually establishes its leading position in the competition for customers’ industrial chains.
“In addition to traditional risk transfer capabilities, we will also expand more partnerships in China and cooperate with different types of companies, because we believe that all clients can actually develop their own risk management capabilities. The cooperation between Swiss Re and Baidu is a very As a direct example, we use risk expertise and insurance innovation to advance the autonomous driving ecosystem.” When Kong Yifeng talked about this cooperation, a proud smile appeared on his face.
At present, Swiss Re and Baidu have jointly launched the industry’s first customized insurance solution for Baidu Apollo’s autonomous driving, that is, automatic parking product insurance. Taking this cooperation as an opportunity, the two parties will conduct continuous research on the risks of different levels of autonomous driving products and design corresponding insurance product solutions.
The move of joining hands with Baidu is not abrupt, and behind it is the long history of cooperation between Swiss Re and the auto industry.
“We’ve had strong partnerships with automakers for at least 40 years. It’s one of the most complex industries in the world because cars are built on a very complex supply chain, and Swiss Re has been working on that Provide risk transfer solutions in terms of risk management and industry.” Kong Yifeng believes that the next area of cooperation between Swiss Re and the automotive industry is obviously autonomous vehicles. In fact, before joining hands with Baidu, the insurance giant had already established a partnership with Alphabet’s self-driving division Waymo in the United States.
“In terms of vehicle electrification and autonomous driving, China may be two to three steps ahead of the rest of the world. Therefore, we firmly believe that we have the opportunity to work more closely with Chinese customers in this field.” Kong Yifeng’s judgment echoes policy and The direction of the market, and the global vision he has established during his 21-year career in Swiss Re will undoubtedly provide him with unique assistance in developing reinsurance, the most international insurance business in China. As early as June 2000, Kong Yifeng joined Swiss Re as a financial analyst at Swiss Re Capital Partners in New York. In September 2006, he joined Group Strategy in Zurich and was subsequently appointed CEO of Swiss Re Corporate Solutions Latin America in January 2011. Before taking charge of the Chinese market, Kong Yifeng also served as the CEO of Swiss Re Corporate Solutions North America for six years.
It is particularly worth mentioning that in March 2021, Kong Yifeng, then CEO of Swiss Re Corporate Solutions North America, led the completion of Granular Insurance, a health insurance subsidiary of Swiss Re and Google’s brother company Verily. After the third year of the new crown epidemic, the importance of health insurance has become increasingly prominent. Kong Yifeng said frankly that this is good for insurance companies, because the epidemic has indeed raised everyone’s risk awareness.
Another positive aspect is the acceleration of digitization. “If we consider all the risks that exist in the world today and compare them to the risks that are already covered by insurance, there is a big gap, which we call the protection gap. If the whole industry accepts and accelerates digitization, this gap can Zoom out faster. From a digital perspective, China is probably one of the most advanced markets today. In health-related areas, we hope to closely integrate technology and risk management in order to help our customers manage different diseases Risk.” Kong Yifeng said.
According to the analysis of the Swiss Re Institute (SRI), China is expected to overtake the United States to become the world’s largest insurance market by the mid-2030s. The rapid growth of the market has driven my country’s life insurance and health insurance product structure to gradually shift to protection, and the business model of insurance companies has also changed from focusing on scale expansion to focusing on refined value mining, which has brought new business breakthroughs for reinsurance companies.
As a key link in business entry, underwriting (referring to the review of insurance applicants’ insurance applications by insurance companies) supported by information technology and data applications has continuously innovated in intelligent underwriting engines and other aspects in recent years. On this basis, at the end of 2021, Swiss Re launched a digital health underwriting system (Digital Health Underwriting, DHU). Obtain the results of the underwriting assessment.
In the process of promoting innovation, Kong Yifeng is also very proud of the role of SRI. “Although SRI is our company’s internal research and development department, it also promotes the research of the entire industry, so sometimes I will make jokes with competitors in this regard.” Kong Yifeng said with a smile, revealing that his seemingly iconic row of white teeth.
In the current rapidly changing macro environment, the importance of research for increasingly complex insurance products is self-evident, and Kong Yifeng’s praise of SRI cannot be overstated. Just recently, SRI and the Insurance Association of China jointly released the report “Development Opportunities of China’s Commercial Nursing Insurance——Research on Long-term Care Service Guarantee in China’s Urban Areas” (hereinafter referred to as the “Report”).
“In the context of life and health insurance, which represents almost 50 per cent of our overall business, aging is clearly a very important topic for us. When we published the report in September, more than 1,400 people were onsite or via remote The way to participate in this event, including personnel from regulatory agencies, academia and various insurance institutions. The most important thing in this report is to tell everyone that it is one thing to know that society is transitioning to aging, but to understand the impact of aging, And how to deal with related risks is another matter.” Kong Yifeng said.
Quantifying the impact of aging is not easy. As a partial attempt in this regard, the “Report” combined multiple sources of information to estimate that the scale of the long-term care service guarantee gap for the elderly in China’s urban areas will be about 920 billion yuan in 2021, and it is expected to reach nearly 2 trillion yuan in 2030. In the future, commercial nursing insurance can and should play a greater role in coping with challenges such as the acceleration of my country’s population aging process and changes in family structure, as well as relieving the expenditure pressure of social security funds.
“In fact, it is not only China that is facing the problem of aging, but many countries. We will learn something from other markets that we can bring to China, but at the same time, as we deepen our understanding of China’s aging society, I I believe that we will bring a lot of things from China to other markets in the future. Moreover, China is developing very fast, and the pressure on the industry is that we can’t wait until 10 years later to know what the answer is, but to make a decision soon Very positive response.” Although Kong Yifeng participated in the “Report” conference remotely at that time, he clearly felt the urgency of all parties to accelerate the development of this field.
At the end of September, Kong Yifeng, who was in Singapore, also accepted this exclusive interview with Fortune magazine remotely. At the end of the interview, he referred to the opportunity to reside in China as a “gift” to his three children, just as his own parents once gave him a precious gift. “I was born in South America in the 1970s and luckily my parents were very open to what I wanted to do. I used to really want to be a journalist because I thought it would be a place where I could develop my interest in international affairs. A career that is combined with hobbies such as economics. But the advice of parents is that instead of just studying journalism and becoming a reporter immediately, it is better to try other professions first, and then engage in journalism after gaining a deep understanding of certain fields. Possibly be a good reporter. Even though I haven’t made it yet, that’s really the best life advice I’ve ever given.”
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Q: How do you usually do physical exercise?
A: I grew up swimming and can be called a swimmer. It’s one of the few times I’m truly alone. When you’re swimming, no one talks to you, and you don’t have to do all kinds of other things, just focus on yourself. Swimming is similar to the CEO role in that you can’t breathe well all the time (laughs). Jokes aside, both of these things do require peace of mind, as there will always be minor crises or emergencies that need to be dealt with. Just like swimming, it doesn’t matter how long or how far you swim, the important thing is that you can adjust your own rhythm.
Q: The current world situation is turbulent, what worries you the most?
A: The world is indeed in a very unique stage, with many difficulties and challenges. But I always try to look back in history, 30 years, 50 years, 100 years, and beyond. I’m not sure if there was a time when the world was peaceful and perfect and everyone was happy? I think that perspective helps me feel less panicked about what’s going on. So it’s not that I’m not particularly worried about anything, but I try to put everything in historical perspective. Ultimately we all want to leave our children a better world. (Fortune Chinese website)
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