Airmic provides tools for risk managers to grasp the nettle

Tracey Skinner, group insurance director at BT Group and chair of Airmic

Airmic, along with the other leading risk management associations in Europe, has responded well to the numerous challenges presented by Covid-19 and the parallel hardening in the commercial and corporate insurance market.

It has adapted rapidly to the new virtual working environment and backed its members up with critical support and information at this time of crisis.

UK risk and insurance managers have had to help their organisations rise to the core crisis management and business continuity challenges presented by the pandemic.

At the same time, they have tried to ensure that that the best possible coverage remains in place to cope with what lies ahead, as insurance prices spiral and capacity dries up in many core lines such as D&O and cyber.

To further complicate matters the pressure to take environmental, social and corporate governance (ESG) issues seriously has shot up the corporate agenda – presenting organisations of all types, and their risk managers, with major reporting and regulatory challenges.

Tracey Skinner, group insurance director at UK-based telecommunications giant BT Group and current chair of Airmic, told Commercial Risk Europe that while this has clearly been a very tough time for the UK risk and insurance management community, it has also been one that has provided it with an opportunity to shine and show its true worth.

Airmic is reaching broader and deeper into the wider corporate community and seriously raising its profile on the back of the renewed spark of interest in risk management.

Airmic members are finding themselves at the heart of the ESG revolution, working with colleagues in a truly enterprise-wide manner to help come up with genuine and lasting strategic responses to the demand for a more sustainable and inclusive approach to business, explained Ms Skinner.

The association is also providing members, and those particularly for whom insurance is only a part-time job, with critical support at a very difficult time in the market cycle.

Airmic is also helping members explore how they can use captives to help cope with the hard market and seek out potential alternatives to standard commercial insurance offerings to try and deal with the big risk transfer questions thrown up by the rise of the pandemic, Ms Skinner said.

“We are hoping to hold a physical conference in Brighton in October but it will not be the traditional format – it will be a hybrid. But on the positive side, we are able to reach a much bigger market in this way, not just London and the southeast, or even just the UK. We are able to reach out to members we have in the US and India, for example. We are continuing to grow our membership and this has to be one of the few benefits of this crisis. We have been able to reach out geographically and to different sectors of the risk management community, such as internal audit, health and safety, IT security, business continuity,” explained Ms Skinner.

As we at Commercial Risk cover the quite dramatic rise of interest in the ESG agenda at the highest level, a raft of regulatory proposals and the fact that risk management and risk reporting lies at its heart, we have wondered how on earth risk and insurance managers, reeling from the impact of the pandemic and parallel onslaught of the hard insurance market, will cope.

Ms Skinner said this is a big opportunity for the risk and insurance management community and one it should grasp.

“When it comes to ESG, our members are really up there. I can’t wait to get going with this at BT, and Airmic is ready to support members in moving forward. There is time pressure but this is not just about one person. The whole business needs to move on with this and bake it into everything you do,” she said.

Ms Skinner said that all businesses have “dabbled” in ESG in recent times but now is the time to take this seriously, deeply embed it into KPIs and make it a fundamental part of doing business. This represents a great opportunity for the UK risk and insurance management community, in her view.

The arrival of the hard market, meanwhile, came as something of a shock to the many Airmic members who have never experienced such a scenario before. Evidence from the recent year-end renewals shows that it is here to stay for some time yet.

Airmic, and its senior executives such as Ms Skinner and deputy CEO Julia Graham, who have experience of such cyclical changes, moved swiftly to provide members with support and advice that was badly needed.

Ms Skinner pointed out that such advice was particularly useful for the association’s members that do not count insurance management as their full-time job.

So, what should Airmic members focus on at this moment in the cycle, as they seek to deliver adequate coverage for an adequate price at a time of spiralling rates and dwindling capacity?

Ms Skinner advised members to move early on renewals, focus on delivering the data that underwriters really need in a format that enables them to truly understand the risk profile in comparison to others – and do not rely solely on brokers to get the job done.

“This is an incredibly difficult time, especially for those who, unlike me, do not have years of experience of the insurance market and it is not their full-time job. People need support and advice on how to limit the damage. It is critical to start the renewal early, finish the job, wash up and start again,” she advised members.

“It is critical to provide the data that the market really wants and needs, to separate your organisation’s presentation from the others on the underwriter’s desk. Be prepared to lose what you really don’t value that may be premium-heavy and driving the agenda for the underwriter,” added Ms Skinner.

“Don’t leave it all to the brokers. They have a very valuable role but the more you can do to engage directly with the core markets [underwriters] and really ensure that they understand your business the better… this is more efficient,” she said.

Everyone in the UK and wider European risk and insurance management community is waking up to the fact that, given the cyclical shift in the insurance market and pressure exerted by the pandemic on insurers, they need to look to alternative solutions.

Captives are a powerful tool in such a market situation, which help both manage the risk in the first place and secure better terms and conditions from carriers, both primary and reinsurance.

BT already has a captive and Ms Skinner said she is confident that larger and more risk-management-mature organisations such as hers will see some interesting options tabled by carriers to help cover future systemic risks such as the pandemic.

“Any public-private parternship (PPP) such as Pandemic Re that may emerge will probably be focused on SMEs,” said Ms Skinner. “The rest of us [bigger organisations with dedicated risk and insurance management teams] are open to bespoke offerings and markets are talking about various solutions. But this will be no blanket market-wide solution, or cheap and cheerful. We have a captive and various markets are looking at creative solutions but it’s very early days,” she added.

“This is a fantastic opportunity for captives. The Airmic special interest group (SIG) for captives is buzzing, we have people wanting to join, looking to have a captive… any profits generated by the captive can be used to spend on risk management improvements,” continued Ms Skinner.

Any help given by government and regulators to make the formation of captives and other self-insurance vehicles more attractive for businesses struggling to cope with the current market and wider economic situation would be welcomed, and the noises appear to be currently positive, concluded Ms Skinner.