Changing the DNA of global insurance programmes

Zurich’s global head of international programmes Marcel Weiss sets out how global insurance programmes need to change in a post-Covid world.

As we emerge from the pandemic, it is clear that businesses and society are undergoing a period of huge change in adapting to the post-Covid-19 world, while at the same time embracing digitalisation and transitioning to a low-carbon economy.

Even before the pandemic, there was growing recognition among risk professionals that the world was changing fast, and that the insurance industry needed to innovate if it was to remain relevant to customers and society. That seems even more true today. Global insurance programmes have a critical role to play in helping large corporates adapt to the changing risk landscape and emerge as more resilient and successful businesses.

Complex unpredictable risks
Each company faces its own particular challenges, but there are three standout drivers that will impact almost all businesses and shape global insurance programmes going forward.

First, the coronavirus pandemic is likely to have multiple implications for corporates, reshaping risks and risk management. In addition to the short- to mid-term impact on claims for global programmes, Covid-19 has put risk and resilience firmly on the board agenda, while accelerating digitalisation and encouraging new business models and more robust supply chains.

Climate change, as well as wider environmental, social and governance concerns, will lead to changing exposures from natural hazards, new regulations and compliance, but also risks associated with the transition to a low-carbon world. Thirdly, the onward march of digitalisation is creating endless opportunities, but also uncertainties in terms of cyber threats and business interruption exposures.

Re-engineering insurance
These challenges demand a response from insurers if they are to remain relevant. Insurers like Zurich are reimagining their products and services, human capital needs, systems and operational structure. In effect, we are changing the DNA of insurance to meet the customer needs and tomorrow’s challenging risk environment.

Global insurance programme customers increasingly require solutions that go beyond risk transfer and include risk advisory, loss prevention and risk mitigation services, as well as access to data and intellectual capital. Emerging risks like climate change and cyber require insurers to add skills and expertise in order to develop new products and services. Solutions to these challenges also require greater collaboration between insurers, brokers and customers, but also with third parties, such as technology companies and data analytics providers.

Some exciting solutions and partnerships are now being launched that will help businesses manage complex and emerging risks, including those associated with climate change or digitalisation. The challenge for the industry is to bring these new capabilities, expertise and services to the global insurance programme offering.

Smarter systems
We already see innovation in the personal lines and SME space, where digitalisation of insurance is advancing at a pace. Digitalisation of large commercial lines, and global programmes in particular, is a harder nut to crack, however. Global programmes are more complex, often requiring both standard wordings and tailored solutions, and are subject to a host of diverse national tax and regulatory requirements. That is not to say it can’t be done, but it will require investment in systems and operational changes.

Insurers have been quietly working behind the scenes to address the back office, using automation and machine learning to remove inefficiencies and improve service. One area where we should be doing better as an industry, however, is on communication and connectivity – in particular, the flow of data between insurers, brokers and customers. Here, application programming interfaces (APIs) are likely to be an important part of the solution. APIs have become a solid pillar of Zurich’s global programmes proposition and are already yielding efficiency gains for all parties, mainly customers.

We are now also beginning to see the next stage of development for global programme systems. Insurers are moving beyond back-office enhancements, using technology and data as an enabler for the global insurance programmes. Smart systems can support the building and delivery of global programmes, and will increasingly guide customers, brokers and underwriters through the process of structuring a global programme, supporting decisions and reducing complexity. Zurich, for example, already uses an intelligent global programme support tool that helps navigate tax and regulatory compliance.

Business-as-usual development
In the past, developing new products or wordings within a global programme was time-consuming, taking months or even years. Going forward, product development needs to move from being ‘project’-based to a more dynamic process if insurers are to respond to changes in the risk landscape and meet customers’ needs.

Wordings are core to the global programme offering but their drafting must become faster and better-tailored to the needs of customers. Technology will enable us to unlock the expertise that traditionally sits within silos and effectively digitalise wordings and enable a more collaborative approach to product development. Zurich is piloting an initiative that uses a repository of wordings to facilitate a cross-function modular approach to wordings. Our vision would give customers compliant, flexible options for wording at the click of the mouse.

Stable evolution
The hardening of the insurance market has been an additional challenge for customers and has led to increased demand for captive and other alternative solutions from global programme customers. However, it has also helped restore much-needed profitability to the global programme market, which bodes well for future investment and development.

Unfortunately, the additional volatility in the market, which has seen sudden increases in rates and tightening of terms and conditions, is not welcome. As the sector emerges from the pandemic, the market needs to achieve greater stability and redouble the focus on the customer.

Contributed by Marcel Weiss, global head of international programmes, Zurich Insurance Group