Generali Global Business Lines is composed of two units: Generali Global Corporate & Commercial (GC&C) and Generali Employee Benefits (GEB), led by Manlio Lostuzzi and Paolo Ribotta respectively as CEOs. These businesses cater to the needs of medium-sized and large global businesses by providing custom tailored insurance solutions in P&C through GC&C; and life, health protection and pension plans to local and expat employees of multinational companies through GEB. Adrian Ladbury discussed progress with the two CEOs.
The rise of the Covid-19 pandemic has inevitably focused the minds of all well-run businesses on the health and welfare of staff, and brought health and benefits further up the corporate agenda. The parallel rise in significance of the ESG agenda will only add to this momentum, believes Paolo Ribotta.
“The global health and benefits (H&B) market has shown its relevance, especially given the pandemic context. Clients have been extremely focused on making sure that their employees were well protected and could receive support and assistance in a number of areas, such as mental health and telemedicine, on a remote basis,” said Mr Ribotta.
“These trends continue to manifest as clients are going into the new normal and they are more and more sensitive to and geared towards addressing ESG factors, with focus on the ‘S’ (social) side,” he added.
For these reasons, the H&B market has continued to grow in line with inflation and life and disability trends. On the health side, the pandemic has understandably led to temporary weaker demand but Mr Ribotta said there are already signs that consumption is returning to normal patterns in the first half of 2021.
“The global corporate insurance market accelerated the robust remediation that was overdue in 2020. After many years of price reductions, and terms and conditions expansion, the market experienced a return to a risk-based approach in the corporate insurance segment. Companies have been forced to re-evaluate their approach to risk in a more serious manner, after many years of traditional risk transfer,” said Mr Lostuzzi.
Mr Lostuzzi said that GC&C was already shifting strategy back in 2019, to correct the damage caused by the long soft market and return to a more technical underwriting basis, before the wider market turn in 2020.
“The impact for GC&C in 2020 was aligned to the technical approach we adopted in 2019, prior to the market turn, however the market hardening has accelerated the benefits planned,” he said.
An important part of this shift was the launch in 2019 of GC&C’s Portfolio Management Framework, through the newly created technical excellence division, which introduced a “client-tiering” approach.
“This allowed us to treat each customer uniquely from a price and terms and conditions perspective, aligned to our ‘LifeTime Partner’ approach. The result of this saw some customers receiving a price strengthening, or terms and condition review, while others received unaltered, or even discounted, renewals. The most impacted territories, in the market hardening, were largely dependent on the portfolio mix and customer profile of the book locally. We saw strong corrections in the UK London market, and in our business in Asia, after many years of overly competitive environments,” explained Mr Lostuzzi.
Market outlook: flat
So, what can risk and insurance managers except from GC&C and the wider market in coming renewals?
“Looking ahead, as some of the peers in the segment are still in the remediation process, we anticipate the market conditions to remain through 2021 and into 2022. The shortage of willing capacity for certain risks should slow the market turning but the trend will flatten for a period, before it begins to soften,” Mr Lostuzzi said.
One interesting factor during the last couple of years has been healthy growth shown by many leading insurers, despite the lockdowns and economic slowdown.
Mr Ribotta explained that during the first quarter of this year, GEB reported “solid” growth in its key European markets: Ireland (+12%), Switzerland (+8%), Italy (+6%) and Germany (+6%).
Asian markets (Vietnam, Malaysia, India) contributed double-digit growth and captive clients have grown as clients look to aggregate, manage and finance risk holistically. “This has largely been a year of consolidation, given the global pandemic, and GEB continued its disciplined and focused approach,” concluded Mr Ribotta.
The growth story in the P&C insurance and reinsurance market has clearly been driven by the hardening of the market overall, even if volumes have been hit by the downturn.
“The growth was driven by a good renewal season in a market hardening cycle, especially in property, engineering and D&O PI. In terms of geographies, the increase was supported by growing areas for GC&C such as Germany, Asia, the UK, Iberia and Latam,” said Mr Lostuzzi.
All insurers have been hit by pandemic-related claims of varying types of course but, on the whole, improved combined ratios often helped by lower administration costs have helped support profits in recent times. Generali was no exception and was particularly helped by its ongoing digital transformation, said Mr Ribotta of the impact on the H&B side.
“Health utilisation rates were low in 2020 as a result of the pandemic and lockdowns. GEB continued its strategy of profitable growth, increasingly focusing on data as an asset to serve customers and support underwriting decisions in the relevant target segments. We have been able to increase our effectiveness and efficiencies, captured in the investments we have made in tools, systems and automation,” he explained.
The shift in market conditions has clearly helped GC&C with its profitability drive under Mr Lostuzzi. “The profitability has been achieved thanks to structured active portfolio management implemented in recent years, as well as supported by positive market momentum and lower claims experience for lockdown effects, such as in aviation and marine,” he said.
The shift to a new, largely virtual, way of working and evolution in the range of services and innovative product and service development that the modern insurer needs to offer its corporate customers, have led to an increase in the value of partnerships with third-party experts. This has very much been the case for GEB, said Mr Ribotta, as the focus shifts from basic protection to a wider service package.
“In the global H&B market, the service component is becoming as important as the protection one. GEB has continued to enlarge and orchestrate its network of protection and service providers, specifically addressing the emerging needs on the health side,” he explained.
Mr Ribotta pointed out that in the past few months, GEB has worked on several partnerships. One is with Sensely, to offer virtual health triage through machine learning tools. Then, more recently, GEB came to an agreement with FlourishDx, which provides support to employees on the subject of mental health.
“We have streamlined our offering to multinational clients when it comes to the needs of their international/mobile employees. With the launch of the eNOMAD platform – an online digital tool dedicated to international organisations and intermediaries – we have simplified the way they can manage the collective quotes of corporate employees globally. All these partnerships have been key initiatives to provide additional support to our global customers, ensuring we tackle our clients’ needs in an agile way, adding value beyond the policy,” said Mr Ribotta.
Mr Lostuzzi said that expanding the range of partnerships with experts and thus enhancing the service on offer is just as important for GC&C’s multinational customer base, and will be even more so in the future.
“Geographical expansions and partnerships are key elements of our strategy. Embarking on strategic partnerships is pivotal because it allows us to join forces with expert counterparts, broadening capacity and skills to meet always changing client demands and an evolving risk landscape,” he explained.
In the world of global programmes, regional partnerships and partnerships with valued specialty providers are critical to offer the full package to the risk manager at the modern multinational.
“Particularly important partnerships for us are: the N2G joint venture developed with US player Nationwide to offer global solutions for US domestic and international clients; a partnership in the parametric insurance sector with Descartes Underwriting; one with Ticinum Aerospace based on ‘deep property’ – a technology that combines satellite data with road images in an AI-controlled system; and an initiative undertaken with Nhazca, a spinoff of the La Sapienza University of Rome, specialising in remote sensing with microwave satellite systems,” said Mr Lostuzzi.
The application of new technologies is obviously critical for any insurer serious about expanding their footprint in the multinational insurance space, and Generali is no exception.
Risk and insurance mangers want to know how their insurance partners are investing in this area to deliver a better service for them and, above all, provide a more transparent and cost-effective market for everyone.
Mr Ribotta said that in the global health and benefits space, data and the ability to derive knowhow are “key” and GEB is making the investments needed.
One example is the GEB Client Data Centre: a portal for reports and dashboards for its pool, GUP and captive clients. “Our Client Data Centre thinks beyond industry-established practice, placing our clients in the position to access and master their data at all times,” he said.
Mr Ribotta explained that this central portal easily grants access 24/7 to all the data related to the policies. Since its launch in early 2020, the company has optimised this solution with several new features. “From now on, clients can drill down on deposits and reserves, quickly retrieve historical data of the last seven years and compare trends within their portfolio, just to mention a few possibilities,” he explained.
GEB also provides leading-edge medical dashboard reports to help clients monitor health and spending trends across their global population. The dashboard provides an overview of claims experience and identifies key medical cost drivers to help clients make informed decisions on their global health plans, to better impact spending and diagnostic trends over time.
“The medical reports show detailed local country medical claims information in an online, tabular and highly interactive format. The way we summarise our clients’ experience and translate this into recommendations is being adapted, based on the specific client data,” explained Mr Ribotta.
Mr Lostuzzi said that given the exponentially increasing number of data sources and ever-increasing data quality, insurers have to seize the opportunity to define concrete measures to close the growing protection gap, by pursuing new ways to insure their customers’ exposures.
“By leveraging new technologies, such as image recognition and machine learning, combined with new generations of data sources coming from satellites, weather stations or IoT, new parametric insurance solutions can provide transparency as well as smoother and faster claims management,” he said.
“Underwriting has always been about expert data management, and corporate underwriting is now on the verge of becoming even more science-based. Over the last few years, GC&C has invested heavily in building, improving and broadening internal systems able to cater for the ever-changing underwriting demands. This gives the added advantage of smoother and faster claims management as well,” he said.
Global programme demand rising
One might have expected the demand for sophisticated global programme solutions to be dampened by the pandemic, as multinationals tighten their belts in the face of economic pressure.
But the heads of both GC&C and GEB are both seeing heightened, rather than reduced, demand as risk and insurance managers seek to better manage their cross-border exposures and help with the effort to raise business resilience.
Mr Ribotta said this makes sense because global H&B programmes place clients in a better position to respond quickly to the various needs of their main stakeholders – employees, management, HR and governmental offices – and take advantage of captive and other alternative solutions.
“That’s why we have grown the captive and pool solutions meaningfully, with clients going decisively into these solutions. GEB Network acts as a platform to collect all the needed insights from local network partners, which are then shared on geb.com,” he said.
“In 2021, we can see that the interest of corporate clients is growing as captives and pools allow greater governance and transparency for the benefit of employees,” continued Mr Ribotta.
Mr Lostuzzi also sees healthy interest in global programmes, which is enhanced not dampened by the pandemic.
“From a financial figures and portfolio perspective, we have seen no dampening at all: both the retention and the production of new global programmes have proved to keep the growth trend as per the past years,” he said.
Mr Lostuzzi said the pandemic has further emphasised the importance for the customer to have a global approach to its exposures, to ensure business continuity and protect its interests. This is particularly true for emerging risks or for risks that may have cross-border and cross-business impact, like the pandemic, he added.
“We expect and foresee an increase in demand for global programs in the next 12 months and more. The combination of state and international investments, together with a general rebound in economic activity and trade, will lead to an increase of international business, exports and production. This is in a framework of increased awareness among clients of the risks that an internationally-spread organisation and dependency on international markets may expose them to,” he continued.
“We are ready to support our clients through the post-pandemic rebound, providing they can pick up any business opportunity, while ensuring the expected global and seamless coverage and service,” concluded Mr Lostuzzi.
The pandemic has not been an easy experience for any of us personally or from a corporate perspective. But there will be benefits to take from this crisis – as with any crisis. If the pandemic has helped force the insurance market and its customer base look much harder at the underlying basis of their relationship, how it can be improved and what products and services are really needed to make business and the world in general more resilient and ready for the next crisis, then that can only be a good thing.