What are the critical issues facing risk and insurance managers in Sweden?
For the last six months, Russia’s attack on Ukraine, the global energy crisis and the dramatic rise in inflation have been the most critical issues. Cyber also remains high on the agenda.
How is the global energy crisis affecting Swedish companies?
It remains to be seen. Some organisations are able to push the increased energy cost onto their clients. Others are not. The Swedish power grid is divided into four different price zones and most electricity is produced in the north, while people and companies are located in the south. This means that the effect from the increased prices will have different impacts in different parts of the country. Other energy sources like gas will affect the production of fertilisers, as well as explosives for the mining industry. One conclusion that can already be drawn is that it will impact sums insured, primarily from a business interruption perspective.
It was predicted back in April that commercial and industrial rates would remain hard, despite insurers’ good results. Has this proved to be the case?
Most risks seem to be adequately priced today after two years of a hard market. We are however seeing a two-tiered market for most lines of business. Clients with a good claims record and moderate exposures are seeing flat rates on renewal, and in some cases even decreases. Clients with a poor claims record and/or more challenging exposures experience more difficult renewals with potential cost increases.
What are the most significant emerging commercial risks for Swedish companies?
Shifting social and geopolitical landscapes; inflation; energy supply; talent shortage; climate change.
Are there are any lines where insurance capacity has decreased or where a lack of coverage is a concern?
Besides cyber, it seems to be going the other way. New capacity has entered the Nordic market and previous restrictions on deployed capacity seem to have eased.
How has the increased prominence of ESG and sustainability affected the risk and insurance management sector?
The increased focus on ESG has been a great opportunity for Swedish companies to differentiate from their global competitors, as most Swedish companies are quite advanced in their ESG work. We are seeing increased attention from insurers on ESG but most insurers are unable to quantify and assess it, so it seems to be more based on gut feeling than hard facts. What is ‘ESG compliant’ for one insurer is not ‘ESG compliant’ for another. It would benefit everyone if the insurance industry could find a standard on how to evaluate ESG.
What regulatory developments have most affected the Swedish risk and insurance market?
The introduction of the Insurance Distribution Directive (IDD) and General Data Protection Regulation (GDPR) has had the biggest impact since the introduction of Solvency II. Both IDD and GDPR have led to increased administrative costs for the industry and it can be debated to what extent the directives have been effective compared to the costs. We are sympathetic to the intention of both but the local adaption of IDD in particular is quite blunt.