AMRAE members expect fair treatment from insurers in 2023

Adrian Ladbury (AL): How and why did you become a risk manager? How has the job evolved in recent times and what value does the risk manager bring to a corporation in your view?

Alain Ronot (AR): After 25 years in the risk and insurance industry working for insurance brokers – Willis, Marsh, Siaci Saint Honoré/JLT and Aon – my former client contacted me to become group risk and insurance director at a French multinational company. The risk manager role is first of all about coordination but also risk exposure analysis, prevention measure implementation and design, and deployment of insurance programs and/or alternative risk transfer schemes.

AL: Do you manage risk and insurance or are the roles distinct in your organisation? What are the benefits of risk and insurance management working closely together?

AR: I coordinate group risk management, including risk mapping and action plan follow-ups, managing also the design, placement and monitoring of all non-life insurance programmes, and employee benefits insurance.

The benefits of being in charge of risk and insurance management is mainly to have a good view of group risk exposures and the evolution of the activities, understanding the key challenges in terms of risks so that you can put in place the right prevention plans, and can design and implement made-to-measure insurance programmes. It is also a way to manage risk in an efficient way, having in mind insurable and non-insurance risk exposures.

AL: How does a good ESG strategy benefit a company and its risk profile? What impact does it have on the insurance programme, if any?

AR: Defining ESG priorities is key for an organisation, and it enables a better understanding and reduced environmental and social risk exposures, to improve governance. Thus, ESG strategy leads to the improved management of these risks and gives more comfort to insurance companies.

AL: What are the big three risks facing French companies in 2023 in your view?

AR: The big three risks would depend on their activities and where they are operating. Nevertheless, we can estimate that geopolitical issues are growing all over the world and it is one of the major risks that is certainly going to increase in 2023. Cyber risk, including data protection, is still a key topic. Finally, I would assume that climate change will lead to a further rise in natural disasters in 2023.

AL: What are the benefits of having a captive during the hard market to help cover challenging risks such as cyber? Will the French Treasury’s planned fiscal incentives for captives persuade you and other French companies to create captives in France?

AR: Firms that have a captive are able to better manage their proper risk exposures in the medium and long term. Having a captive enables you to show the insurance market that you have confidence in your risk. You can reinsure part of your risk so that during hard markets it enables small, medium-sized and multinational groups to find insurance solutions when the market is not prepared to take out some risk exposures, or to complete insurance programmes.

The new French law supporting reinsurance captive formation is undoubtedly going to increase the creation of captives in France, especially with the hardening insurance and reinsurance market.

AL: How do you think the commercial insurance market has performed during recent renewals? Do you expect the market to soften in 2023? Which lines do you think will be the most challenging this year and what is your strategy to obtain the best possible coverage at an adequate price?

AR: It has been very difficult to renew non-life insurance programmes during the last few years, with capacity shrinking, deductibles rising and new exclusions applied. In 2023 the property insurance market is going to harden due to the reinsurance market following natural disasters in 2022. The cyber insurance market is still complex but the D&O insurance market seems to be more stable.

AL: What could and should associations such as AMRAE do to help improve the way the commercial insurance market operates? What must insurers do to improve their service, lower costs and deliver more innovative coverage when and where it is needed?

AR: AMRAE is supporting risk and insurance managers, in particular to better understand their risk exposures and the insurance and reinsurance market situation. AMRAE is also delivering messages to the insurance and reinsurance market based on the feedback of risk and insurance managers. We expect insurers to enable corporates to cover their major risk exposures at a fair price.

AL: Do you use brokers and, if so, what must they do to improve the level of service in this tough market? Are you comfortable with paying brokers’ commissions and fees while they also take fees from insurers for services?

AR: The most important thing is that insurance brokers deliver good services all over the world. Their remuneration should be transparent whatever it is – commissions and/or fees, and including incentives calculated on performance. In this tough market, we are expecting new ideas from insurance brokers, alternative schemes mixing traditional and alternative risk transfer and alternative risk financing. It requires senior and experienced teams.