Helene Westerlind, a Swedish citizen, joined Zurich as liability claims adjuster in 2003 before becoming a liability underwriter. Between 2008 and 2016 she held various leadership roles within Zurich Global Corporate, both in operations and underwriting services. In September 2016, Ms Westerlind was offered a new role as global head of international programmes within Zurich’s new commercial insurance business operation. This unit was formed through a merger of two separate businesses within Zurich – Global Corporate and Commercial Insurance – and is led by James Shea. Ms Westerlind’s newly-created role was aimed at clearly positioning Zurich Commercial Insurance face to face with international customers, putting international capabilities and teams under one leadership, and creating a clear focus. Commercial Risk Europe editor Adrian Ladbury discussed Zurich’s strategy for the large corporate market, to learn where Ms Westerlind sees the biggest opportunities and challenges.
When Helene Westerlind took on a new role as global head of international programmes at Zurich, she did not make the decision lightly; she was aware of both the challenges and the opportunities.
Zurich is, and has for sometime been, an innovative leader in this increasingly important area. So, Ms Westerlind took over both a strong brand and base with diverse teams from various areas of the newly-merged organisation. She needed to transform it into a one-international-programme approach, while making a clear statement to the market about Zurich’s commitment to this segment.
But this is a highly competitive and tough area of business – there are no easy profits to be made. It may offer very high value in premium terms but it is complex, demands great expertise and must adapt to frequently changing regulatory and fiscal rules.
A strong international network is central to enabling a valid offering for corporate risk and insurance managers. That network might be fully owned, fully outsourced through partners or, as is usually the case, a combination of both.
In the past, the prevailing opinion was that only insurers with a truly global network of fully-owned operations were able to succeed in this market. But those days are gone, if indeed they ever existed. In practical terms, the cost of planting a flag in each territory throughout the world is simply not justifiable.
To succeed, a strong, truly global network committed to delivering the level of service consistency promised when the deal was signed is required. This global network of underwriters, customer services and claims needs support and guidance from a strong core of skilled people at the center.
Zurich and other leading international insurers may have recently decided to pull out of several non-profitable territories and regions. But Ms Westerlind explained that the Swiss-based group retains a global network covering more than 210 territories.
The strategy has always been clear: a mixture of Zurich-owned offices and a solid partner network. The solution is to have depth and breadth in terms of people and skills dedicated to this business. At the end of the day, this is a people business.
The Zurich network comprises more than 2,000 professionals across functions dedicated to managing in excess of 7,600 international programmes. The group has some 8,000 claims professionals that handle more than 150,000 claims annually, and 800 risk engineering professionals. Ms Westerlind has about 200 dedicated experts spread out around the globe, who work with her to manage and drive international programme business.
Some 90% of Zurich’s international programme gross written premium and claims volume is managed by more than 50 Zurich-owned offices. “The remainder is handled by our strategic network partners – many of which go back over 20 years. We are confident we have a very strong and reliable network to service customers across the globe,” said Ms Westerlind.
Since Ms Westerlind’s arrival in Sept-ember of 2016, she and her team have repositioned and relaunched Zurich’s international programme proposition to focus more on customers and brokers. One of the first changes was reorganising and refocusing to improve coordination, offer customers a better service and deliver a better return on investment.
Ms Westerlind explained that several key pieces come together to make the business truly customer-centric. These are:
- International programme training: Not only for Zurich employees dedicated to international programmes but also for its network partners and brokers – especially in the growing middle market – to improve service and deliver in a more consistent manner.
- Technology and innovation: Investing in new technologies while acknowledging the core applications built over years, to give a strong, integrated and global solution for smooth international programme platform operations.
- Products and customer solutions: Providing a broad range of state-of-the-art international programme core products globally and a defined set of niche products, serving the full range of customer needs from heavily tailor-made to more standardised solutions, such as the newly-launched Property Prime solution.
- Global footprint and operating model: A central team supporting the front line with a focused underwriting, tax and regulatory team to give a more consistent model in areas like claims payments, while also providing a focus on captive solutions and taking advantage of the increased opportunities.
- A strong focus on claims: Particularly on communication, making coverage and processes clear at the outset to avoid any misunderstandings. There can be no compromise. A strong network must offer both efficient and effective core processes on a global level. And it must accommodate local differences and enable smart, seamless customer solutions globally and locally, explained Ms Westerlind.
Another important area of improvement was the need for global sales to be better coordinated, she said.
“We needed an international programme team on a global level to ensure that we had a good competitive pooling model, and an integrated reinsurance facility that could manage all capacities and facilities within Zurich,” Ms Westerlind said. At its heart, it should allow captive customers, of which there are many, numerous opportunities to leverage Zurich as a fronting partner using our infrastructure, she added.
The end-to-end approach was also important for tax and regulatory matters, an area where risk managers are demanding consistency from carriers and brokers, and the market as a whole. “We have built a consistent, competitive model,” said Ms Westerlind.
Despite challenging conditions in the global insurance market, rising protectionism and uncertainty over insurance regulations and fiscal rules, international programme business remains a great opportunity as long as insurers have the right approach, skills and infrastructure needed to make it work.
Some people believe that global programmes no longer make sense and that the only way ahead is to buy all cover locally. Ms Westerlind was asked to remind us why a risk manager should consider using a global programme in the first place.
Here are her core reasons, which she refers to as the ‘Five Cs’:
- Coverage: If structured correctly, an international programme helps to bridge coverage gaps across territories and avoid duplications, while providing greater transparency on what the policy will cover in the event of a loss.
- Convenience: An international programme can provide a one-stop shop for an organisation’s international insurance needs. The programme can give access to specialists and market-leading tools, whether the organisation is a large multinational or a mid-sized company.
- Costs: Combining domestic and foreign exposures under a master programme can give organisations the ability to attain overall higher limits at lower costs, because of diversification and economies of scale.
- Control: A centralised international programme helps to ensure greater consistency and continuity, enhances service delivery and gives greater transparency before, during and after programme implementation.
- Compliance: Working with a global provider knowledgeable of local jurisdictions means that organisations can be certain that their insurance programme will be aligned with local laws.
- Ms Westerlind also noted that insurance regulations and tax rules are undergoing continual change, which could be considered ‘the new normal’. This has broad implications for global programmes. The introduction and increase of Insurance Premium Tax (IPT) across the EU during the past couple of years, as well as the introduction of the Base Erosion Anti-Avoidance Tax in the US, mean new expectations are placed on the shoulders of global insurers.
“We need to be fully aware of the changes early on and ensure compliance, in addition to providing tracking capabilities and proving tax payments to the local tax authorities. Even in the UK, the Criminal Finances Act 2017 has been implemented, introducing a new corporate offence for failing to prevent facilitation of tax evasion by an ‘associated person’, either in the UK or abroad,” she explained.
In this context, Ms Westerlind stated: “Zurich was recently audited by the UK tax authorities in the area of Insurance Premium Tax and was given a high level of assurance around its overall IPT procedures and IPT returns, which gives us strong confidence in our proposition and more importantly, our people.”
International programme business has become a highly competitive market of late and, of course, jumbo accounts are limited in number if not scale. So where is growth going to come from?
“On the growth side, we see smaller, mid-market accounts as an area where we are growing year on year and in which we are very interested across the globe. In North America, Latin America, Asia-Pacific and EMEA this is a very interesting segment for us to develop. But we are not taking our eyes off the larger multinationals, and have a clear strategy to continue growing together with these customers, as well as attracting new customers,” she said.
Geographically, there are also some interesting trends that offer decent growth opportunities, according to Ms Westerlind.
“In markets like Latin America and Asia-Pacific we see international opportunities increasing, which is great. In North America we are seeing Asian companies entering that market. Currently they are not yet setting up international programmes, but rather a local US setup. This represents an opportunity,” she said.
There is huge potential in the Asian market because of rising interest in both global programmes and captives. At some point, the floodgates will likely open. “We are seeing many developments in the Asian market. We are very close to it and see many opportunities coming out of this market,” Ms Westerlind said.
Canada also offers decent growth opportunities, according to Ms Westerlind. “We see this market evolving as brokers and customers become more conscious of the costs and compliance issues they need to manage,” she said.
The captive sector is another increasingly important area of focus.
“Captive owners are an area of focus for us, given the strong position and knowledge that we have here. We are seeing that large European captive owners are starting to use their captives more proactively,” Ms Westerlind said.
She said the reasons why captive owners are making greater use of captives include:
- Optimise insurance and reinsurance structures
- Bring the two worlds (life and non-life) into one reinsurance captive
- Benefit from arbitrage opportunities in the markets (pricing, coverage and capacity)
- Strengthen the core business of the captive owner
- Develop solutions for new risks.
“In these areas, the captive owner needs a highly experienced insurance company as a fronting partner to allow them to efficiently access the reinsurance market,” she added.
Technology is an important aspect in global programmes.
Based on Commercial Risk Europe’s regular conferences, individual meetings and roundtables with risk managers across Europe and worldwide, it is obvious that while cost is as important as ever, service and administration are in some respects even more crucial.
“Risk and insurance managers have limited resources and time. They do not want to waste that valuable time chasing insurers and brokers for documents, having to re-key data because systems do not talk to each other and, worst of all, spend endless hours trying to work out how and where to have claims paid, inevitably incurring expensive legal costs in the process,” Ms Westerlind said.
Digital and blockchain technology appear to offer a brave new world for users of global programmes, in which policies are seamlessly, speedily and effortlessly agreed, while disputes over what is and what is not covered become a thing of the past.
Ms Westerlind clearly recognises the central importance of technology in this complex market and said that Zurich is giving it top priority.
“New technologies are critical to making this a more efficient and user-friendly part of the business. We fully recognise that technologies such as blockchain and robotics – which we have successfully launched globally for received/incoming business as well as producing business in EMEA, Latin America, the US and Asia-Pacific – are critical. We are currently looking into further leveraging blockchain technology, also called distributed ledger technology. In this context, we are exploring this technology together with some of our long-term international customers and finding some interesting collaboration opportunities,” said Ms Westerlind.
“We have also built an Application Programming Interface to connect our customers’ risk management systems with My Zurich, our core risk management system. This means that the customer can get the data directly in their risk management system rather than having to go via our My Zurich portal. We have received some great feedback after launching our first pilot and now we are looking forward to onboarding more customers. Another important development is the use of cognitive computing, which enables automatic comparison of the master policy with local policies to ensure that contract certainty is secured locally,” she continued.
“Zurich is investing in all of these areas to create a solid core infrastructure. Then further work is carried out on a case-by-case basis, in areas where we can find benefits for our customers and brokers. The core focus is still to get the basics right and this is what we heavily invest in through training, data quality, collaboration and communication – delivering a differentiated service experience for our international customers,” Ms Westerlind added.
She concluded that the key pillars for global programmes remain the Five Cs – coverage, convenience, costs, control and compliance. But she added another – credibility. “This is equally important and arguably only comes as a result of seamless delivery from all our employees across the value chain, every day and in close collaboration,” she said.