02 Munich Re: The driving force behind innovation

For 125 years Munich Re has been a pioneer and innovator in the insurance industry. We develop new solutions, tap into markets and turn ideas into reality. Carl Thieme's visionary concept has had a telling and sustained impact on the reinsurance industry as a whole.

Dawning of a new era of reinsurance

In 1880 only one-third of all reinsurance premiums went to German reinsurers. Their position vis-à-vis primary insurers was too weak; they were largely appendages of the latter and only barely managed to survive. The visionary Carl Thieme considered the practice to be antiquated and hardly a viable proposition for the future. His first innovation was a corporate concept that would revolutionise the whole reinsurance industry.

"A reinsurer has to be independent and free to select its own business. It must be able to balance out risks better by having a larger number of different classes of business and a more extensive geographical spread. Treaties have to be standardised to reduce the amount of work involved. And it is necessary to stress the value of partnership between the primary insurer and reinsurer."

These principles are still evident in our corporate culture today and secure our success in the long term.

Taking new paths

To achieve a better balance of risks, new classes of business and new solutions have to be developed. This requires insurance know-how paired with the ability to recognise risk fields at an early stage - interdisciplinary teams that can put their knowledge to practical use.

A look back to 1898: Fritz Böhrer was Technical Director in a printing works before he joined Munich Re. He knew what happens if a boiler bursts or a connecting rod shears. He developed a machinery insurance that had not be available in Germany up to then. Thieme backed this idea, and on 1 January 1900 the new product was granted the concession for the Kingdom of Bavaria and in 1903 for the whole of Germany.

A few years later Carl Thieme got to know Hungarian timber merchant Max von Engel, who introduced a new concept for luggage insurance. The insurance would be purchased at the ticket desk at the start of the journey, the premium being based on the length of the journey. Any losses had to be documented in a credible fashion and claims would be settled promptly. A simple enough concept, yet no primary insurer was willing to offer the product. Apart from Thieme, that is. Together they founded the Europäische Reisegepäck-Versicherungs A.G., known today as "Die Europäische", the market leader for travel insurance in Germany and a wholly owned subsidiary of Munich Re.

Another novel feature worth mentioning: we were the first German reinsurer to have a financial interest in a primary insurer. Arguably the best-known insurer today was founded by Thieme in 1890, i.e. Allianz.

Dealing in knowledge

We have been engaged in research for 125 years. Of course, it all looked quite different back then. Fritz Böhrer sent out hand-written letters to test the market for his machinery insurance. Today we work with knowledge databases and highly complex statistics tools. Since the San Francisco earthquake in 1906, we have been investigating natural forces. As Dr. Gerhard Berz, co-founder of Geo Risks Research and popularly known in the media as the "master of disaster", says: "Our World Map of Natural Hazards is displayed even in the offices of our competitors."

Today our research departments and innovation teams deal with topics such as climate change, biotechnology, megacities and capital market concepts. Our actual tasks may change, but our object remains the same: by virtue of our knowledge and in dialogue with our partners to promote the development of clients and classes of business and to make this development safer for the future.

In this way, we continue to be pioneers and innovators in the business of risk.