Evolution not revolution

Dealing with the unexpected is second nature for insurers but these last few weeks have been particularly challenging, Chris Staes, managing director of HDI Global Belgium, sponsor of this year’s Risk Frontiers Europe survey, tells Liz Booth In a month in which the news has been dominated by the Ukraine crisis, it is no wonder that political risk is top of mind for many in the insurance industry across Europe. Chris Staes, managing director of HDI Global in Belgium, is no exception. “What is going on in Ukraine is a major concern, not just for us as insurers but for clients and brokers too. There has been an immediate and necessary focus around sanctions and compliance to ensure we are doing the right things as the situation changes around us,” he says. “Every day it seems that new sanctions are being imposed, which we must comply with,” he adds. Staes says this is particularly true when it comes to ensuring global programmes remain compliant and are functioning properly. While Belgium falls under the European Union sanction framework, as a global insurer HDI Global faces a host of sanction regimes and has to ensure both it, and its clients, remain compliant. The second major risk from the Ukraine crisis is supply chain-related, and particularly energy supply, says Staes. He acknowledges that it is way too early to predict what will happen, but expects that both energy and food will be in short supply following Russia’s invasion of Ukraine. “Belgium is too dependent on other countries for gas and the price has gone up five or six-fold from just six months ago. On top of that, we also still have the impact of the Covid-19 pandemic, which continues to disrupt some supply chains and is fuelling price inflation,” he says. These factors will produce new risks for clients and insurers. “When the prices of raw materials are rising because of shortages, so does the cost of everything else – including all the spare parts needed to rebuild after an insurance claim,” warns Staes. “There is so much interdependency throughout the entire supply chain and insurers are not immune.” Although it is difficult yet to assess the impact on claims, it is something that HDI Global will be monitoring closely. The insurance industry will also be keeping a watchful eye out for any surge in cyberattacks. This is something that many European governments, including Belgium, have warned could happen in the wake of Russia’s attack on Ukraine. “There may be business interruption as a result of a cyberattack. Clients need to be better prepared and to optimise their cybersecurity. But it is still too early to tell what will actually materialise,” says Staes. Despite the war, he stresses that is important not to forget other risks, pointing to natural catastrophes in particular. “Only two weeks ago we had a major storm, storm Eunice, which will result in one of the biggest claims for the Belgian property insurance market,” he says. However, that brings Staes back to supply chains once more. He points out that many of the claims from storm Eunice will be impacted by the supply chain crisis that existed before the war in Ukraine, a leftover from the Covid-19 pandemic. “As an insurer, it is so important that we emphasise our risk engineering capabilities and prevention services. We try to discuss that with our clients. It is about transparency and collaboration,” stresses Staes. Expecting the unexpected has never been more apt, he continues. “Two weeks ago we were worrying about storms, now it is once again cyberattacks and, of course, the impact of the Ukraine crisis. Before that it was the pandemic, and that has not gone away yet either. Risks are becoming more and more complex,” he warns. HDI Global positions itself as a stable partner for the long term and Staes says the past two years have shown the value of this approach. Rates have risen but Staes says that through disciplined underwriting and a one-to-one approach, HDI Global has managed to maintain and even grow its client base. The company’s strength in captive management and other alternative solutions has also paid dividends. It has been able to support clients as they looked to new mechanisms for their programmes, says Staes. The insurer adds that it is hard to predict what might happen for 2023 renewals, but notes that the Ukraine-Russia situation may well have a bearing on proceedings. But he does predict that there is unlikely to be an even picture for future renewals, with cyber an area of particular concern. “With cyber we need to get a clear view of the risk situation. Transparency between us and our clients will be key,” says Staes. Looking forward, he says it will be important for both insurers and insureds to keep ESG issues top of mind. “It is high on the radar for all of us. We are paying a lot of attention to the environmental part of the conversation. We, as a company, have a goal of net zero by 2030 for our own operations; and we will be supporting our clients through the period of transition. We also offer insurance solutions for renewable energy. And of course, as a company, we need to comply with all the new rules and regulations as they come along,” says Staes. He is keen to stress that “this is an evolution” and HDI Global wants to know and understand how its clients see the transition to net zero, before then working to support those goals.

Evolution not revolution

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