No sign of hard market…or innovation from Switzerland

Swiss risk managers taking part in our European Risk Frontiers survey do not expect a significant change in overall insurance market conditions over the rest of this year and into renewals. Appetite among certain carriers in some lines may not be as high as the past, but there is still plenty of capacity available to step in when one or two carriers decide to take a stand. This clearly remains a buyers’ market for now. “We do not talk of soft or hard markets,” said Nancy Wellinger, insurance manager for SBB Railways. “The market mirrors the level of free cash on the market, and so long as insurers remain profitable and there is no change in interest rates then high capital and capacity will remain. Maybe one or two lines are not so healthy but, overall, I think it will stay the same,” she added. Stefan Haemmerli, risk manager for the Canton of Zurich, pointed out that while the market may be healthy for corporate insurance buyers overall, the end result for buyers does partly depend upon the power held by the individual risk manager. “It can depend where you are working at the end of the day. SBB will be a key account and if you work for a big and prestigious company like this then you can ask for more and the insurers will do what they can to accommodate you within reason,” he said. Ms Wellinger added that, in this highly competitive market, only those insurers that are able to come up with valuable new solutions, services and true innovation will make decent profits in the longer run. “There are companies that do not have such an appetite currently, but there is plenty of capacity out there including the London market. As long as insurers want to grow then they will have to react to market prices. Only those who deliver valuable new products and real innovation will make good profits. The main problem for this market is still that it approaches the business on a traditional line of business basis,” she said. Sabrina Hartusch, risk manager for international lingerie firm Triumph, agreed with her Sirm colleague and most other participants in this year’s survey that the insurance market continues to struggle with its fundamental model, which was designed for a different age and does not make innovation and flexibility easy to achieve. “The current structure of the market comes from many years ago when it was a tariff market. This ended years ago but I feel that people still think in this way, running through the sheet. Maybe in future, however, insurance will be sold with products in a totally different way. Amazon recently bought Whole Foods in the US and is forging a completely new approach to retail using Big Data. Why should this not happen in insurance?” asked Ms Hartusch. Ms Wellinger added that the insurance industry needs to act sooner rather than later or risk being left behind. She is not alone in this opinion. “Sometimes we, as customers, say that insurance companies are not flexible enough and the customer will ultimately have to find innovative solutions themselves and find a way to pool their own risks. I think this is dangerous for the insurers as they lose good opportunities to grow and to learn from the real market needs. On the other hand, we are paying commissions every year but prices are affordable. As long as they remain so, for now, most customers will continue to buy at least basic cover on the open market. For catastrophe risks of course we need insurance in the upper layers throughout, but it is currently quite accurate to the cost of capital!” she said.

No sign of hard market…or innovation from Switzerland

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