Belgian risk managers still waiting for more joined up approach from insurers on emerging risks – Belgium

For risk managers, the term ‘emerging risk’ should be more accurately termed as ‘emerging insurance’. There is a belief that many of these risks, such as supply chain and business interruption, used to be provided by insurers as part of mainstream coverage but, because the nature of the exposure is changing, they are now being excluded and packaged as new and separate insurance products. This is typified by cyber insurance, said Gaëtan Lefevre, President of Belrim and CMI. “We make a lot of noise about cyber risk but I am not sure that the insurance is related to the right risks.”hideThis is not even true of the banking sector, said Sabine Desantoine of ING. “In the banking sector we already have some existing coverage because cyber risk is just another form of fraud—computer fraud. So there is not a lot of interest in cyber risk among Belgian banks because there is no feeling there is something new in the insurance market.” The development of cyber risk insurance is similar to the development of reputation insurance products, said Mr Leeman. This is because it is being sold as a separate, stand-alone product when it should be incorporated as part of existing coverage. “There is also a lot of confusion in the market about what is and what is not included in the coverage and there are a lot of grey zones,” he said. The approach by insurers runs in contrast to the trend identified by risk managers, that risks are increasingly interconnected, said Mr Leeman. “Insurers should be developing blended coverage where you have all types of risk in one policy.” He likened it to a sausage of risk where insurers are selling coverage as separate slices. For example, cyber risk should be part of a fraud policy and environmental risk should be part of a liability policy but instead they are being sold as separate policies, or slices to stick with the sausage analogy. Inevitably, said Mr Lefevre, this creates a gap in coverage between the two policies. Whether a risk that used to be simple but has now become more complex is blended into a package or separated, the issue for insurers is appropriate pricing, said Rudi Casteels. “Many risks have been around for a while but their dimension has changed and this needs to be looked at closely.” While full-time insurance managers are able to identify the gaps that Mr Leeman referred to and press their insurers for the type of products that meet their demands, the same luxury is not available to smaller companies. Consequently there is a real risk that many of them will wrongly believe they are insured for certain exposures—a realisation that will only become evident when they suffer a loss and try to claim, said Sonia Cambier of Solvay. “And when claims are not paid, this hurts the reputation of the insurance industry,” she pointed out. If risk managers are unhappy with the provision of insurance as separate products rather than a blended policy, they are also frustrated with the quality of their claims service. The blame lies mostly on the brokers, according to the risk managers, who are sometimes conflicted in their interests, and feel they have to balance the demands of the insureds and their claims with the demands of the insurers and the commissions they provide. “The system is not working as it should. Brokers should be wholly paid by the insured and not by the insurer,” said Mr Leeman. Insurers are also to blame though. “It is becoming more and more difficult to manage your claims with insurers, although there are some exceptions,” said Mr Lefevre. “The first reason is because they are more afraid after some of the huge claims they have had in the last two years. The second reason is due to a lack of competency in the claims handling departments.” The lack of competency has resulted from a widespread cull of senior claims handlers who have been replaced by very junior staff and if there is one position that you need very experienced staff it is in the claims handling department, said Ms Cambier. According to Mr Leeman, the change is indicative of a wider trend across larger companies in all industries of a greater timidity and aversion to action. “People do not want to take decisions any more. They want to be covered or backed up by 20 other people. They do not want to ask difficult questions of their superiors and the fear of being fired reigns on the shop floor. They are not creative and they have to stick to very tight procedures. Internal audit is always around to cut off the heads and hands of talented people who dare to think out of the box. “This is a sad evolution and it is a difficult condition to operate in and one that causes much more stress than a high production regime. The bulk of the western economy is shooting itself in the foot with its obsessive regulatory behaviour. Don’t get me wrong, we should not go back to the Wild West but a little bit of that spirit would be good for our economic future.” There are exceptions. The marine insurance sector was cited by the panellists as one area of the insurance industry where there are still experienced claims handlers and underwriters, a greater reliance on trust and a willingness to find creative solutions. Although the marine insurers were not immune to criticism from the panellists, especially for claims that are made in countries different to where the policy was placed. In defending the insurance industry Mr Casteels said: “We are convinced that service is important to clients, especially as we have seen some clients move to another carrier based on price but then come back to us for the service. Of course, experience and service come with a price tag.”

Belgian risk managers still waiting for more joined up approach from insurers on emerging risks – Belgium

Want to read this article?

Read Next

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

Costs rapidly rising for employee health insurance in Portugal

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

Costs rapidly rising for employee health insurance in Portugal

Want to read this article?

Read Next

Risk managers want software providers to integrate more AI tools

Court says German government must tighten up climate protection

Alternative solutions and specialty drive Scor’s Q1 growth

AXA XL names new client and distribution officer in APAC and Europe

Costs rapidly rising for employee health insurance in Portugal

Related Articles