AMRAE to push market to close gap between risk and insurance

The insurance market is still falling short when it comes to offering companies the coverage they need for emerging and some developing risks, according to Brigitte Bouquot, president of AMRAE. In response, the association will prioritise discussion with the insurance market in the year ahead to find ways to bridge the gap between risk and insurance, she added. Speaking to Commercial Risk Europe ahead of the AMRAE Rencontres in Marseille this week, Ms Bouquot said: “I do not believe that there is enough capacity available in the market for risks such as cyber and GDPR liabilities. “On non-physical damage BI, capacities are not enough either. Insurers are quite cautious regarding the deployment of their capacities,” continued Ms Bouquot. “There are plenty of issues regarding emerging risks that have not yet been addressed by the market,” she added. AMRAE’s president pointed out that insurers have made good progress in areas such as natural catastrophe cover, but not so much in others like supply chain insurance. She acknowledged that the insurance industry is under the cosh and going through transformation, as underwriters strive to adapt their business models to the prolonged low interest rate environment and soft market. This has led to a prudent approach from many insurers as they face up to big questions about their future. As a result, insurance groups are re-organising their business. Large underwriters such as Zurich, AIG and AXA have recently announced restructuring measures as they try to adapt to the current operating environment. The wave of mergers and acquisitions, such as AIG’s recent purchase of Validus Re last month, provide examples of the same trend. “Insurers are clearly preparing themselves for important transformations,” Ms Bouquot said. “And it is very important that they do it, as was illustrated by the catastrophic losses of 2017.” The fear is that 2017’s heavy losses will increase the cautious approach to emerging risks from the risk transfer industry. Ms Bouquot said AMRAE will therefore focus on discussions with the insurance market this year to try and boost the coverage on offer. The association is working with underwriters to develop coverage in areas that do not meet buyers’ needs, she added. When it comes to cyber risks, for example, this has focused on a sector-by-sector approach that seeks to find solutions that meet the needs of individual business sectors. A worrying development for Ms Bouquot, French companies, and others in continental Europe, is the possibility that they will have less access to the London insurance market as a result of Brexit. “For us, [as] risk managers, it is positive to count on the creativity of London market insurers, as well as on the strength of continental ones,” Ms Bouquot said. “We have enjoyed the benefits of working with everybody. So we are a little sad with possibly having our access to London restricted by Brexit,” she added. She noted that Lloyd’s has traditionally been a source of coverage for European firms that find protection hard to come by in their home market. One example is protection against GDPR risks, which can be arranged in the London market, but not in Paris. Ms Bouquot went on to stress that captives remain crucial alternative risk transfer tools at organisations’ disposal, to cope with emerging risks. But risk managers are increasingly needing to justify their use following developments such as the OECD’s Base Erosion and Profit Sharing initiative and Solvency II. It is important that they continue to make that case to regulators and internal stakeholders, said Ms Bouquot. “The use of captives to optimise tax policies is a thing of the past,” she said. “But it is of essence that the word ‘captive’ is perceived by CFOs as a synonym of stability [and] not a source of troubles. Captives can be tools for companies to become more resilient and to act in an ethical way.” AMRAE’s president also stressed the importance of members tackling cyber risks as the threat grows. Large French groups such as Renault and Saint-Gobain suffered well-publicised cyberattacks last year. “In 2017, French companies have understood what is at stake with cyber risks,” Ms Bouquot said. “It has become clearer for more and more organisations how important it is to invest in prevention and purchase cyber insurance.”

AMRAE to push market to close gap between risk and insurance

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