BI coverage uncertainty demands team effort on wordings: Berger

The European and international risk and insurance industry needs to “team up” and “align” to bring more certainty and clarity about what coverage they are actually offering in key areas such as business interruption (BI) and cyber, according to Andreas Berger, chief executive officer, Swiss Re Corporate Solutions (CorSo). The uncertainty over wordings and legal battles that came with the arrival of Covid-19 and subsequent lockdowns has clearly shown that “all parties need to up their game” to deliver better service and products for customers, he said during a press briefing held to explain CorSo’s strategy into 2022 and beyond. CorSo has performed well during recent times since Berger’s arrival in March 2019, following a difficult period. Results have improved significantly on the back of a serious re-underwriting of the book of business and withdrawal of limits from lines that offer inadequate returns and excess volatility. Looking forward, Berger said the experience of the last couple of years, particularly uncertainty over the validity of BI cover for lockdowns, has underlined once more how important clarity of wordings and contract certainty is for customers and carriers alike. “There is always talk of rates and prices, but terms and conditions are super important,” said Berger. The long soft market that preceded the recent hardening did not help as carriers and brokers came up with broader and broader wordings to win business in a highly competitive environment, pointed out the CorSo CEO. “We have seen various court cases because of very broad language. There is a lot out there, which leads to different views. This needs to be clarified… [it is] an opportunity for carriers to come up with clearer wordings. Plus, don’t forget there are a lot of broker wordings out there,” said Berger. “We need to team up and align because customers are suffering and a lot of insurers are too. The customer has a duty to disclose all relevant information… all parties need to up their game and bring more clarity into insurance products,” he added. One key area of high uncertainty for risk and insurance managers currently is cyber. Not that long ago, insurers were falling over each other to win the business with big limits and broad wordings. During recent renewals and against a backdrop of mounting losses and fears of systemic risks, the landscape has changed dramatically. Swiss Re has traditionally taken a more cautious approach than others in cyber and will currently be grateful for that. Berger said CorSo and the wider group are working hard to offer relevant coverage and clear wordings for customers but would continue to tread with care in this fast-evolving space. “Yes, we cover cyber but we have a very cautious approach to exposures and covers provided,” said Berger, when asked by Commercial Risk Europe about the group’s strategy looking ahead. “We are still a very large capacity provider from a reinsurance and CorSo perspective but we have very clear central limits set, which is important. We believe there are a lot of covers out there that are not fit for purpose, which is why a lot of companies are exposed… we are working hard to understand the exposure, trying to model it, this is an ongoing effort… we will invest more in modelling so bear with us,” he added. Fred Kleiterp, regional chief executive officer EMEA, added that it is also important to remember the critical role that loss prevention plays in the cyber area. “It is also about supporting customers with risk management; it can’t just be about cover, it’s also about prevention,” he said.

BI coverage uncertainty demands team effort on wordings: Berger

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Want to read this article?

Read Next

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Strebel to replace Gonzalez as head of Swiss Re China

Risk managers want software providers to integrate more AI tools

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