German insurance managers advised to question what cover they really need

German insurance managers are advised to start their renewals as early as possible, be transparent with brokers and insurers, look at alternatives to secure the best possible terms and conditions, and not be faced with the nasty shocks that many faced in recent renewals, according to Jochen Koerner, managing director of industrial business at fast-growing independent broker Ecclesia. Mr Koerner told Commercial Risk Europe that he fully sympathises with the many German insurance managers who have complained of rough treatment by their long-term partners during the last couple of renewals. He said he was not sure that the carriers can really be accused of being brutal or unfair but did say that in some cases decision-making was downright stupid. It is probable that the entire market became “complacent” during the long soft market and in many cases the basic questions of what cover to buy and why were probably not asked enough, suggested Mr Koerner. The broker, who took charge of Ecclesia’s industrial insurance business in 2017 after a long career at Marsh, said the market disruption caused by the hardening over the last two to three years had enabled his firm to win new clients from other brokers as they struggled to keep customers happy, while maintaining an impressive retention rate of 98%. Further disruption in the German and wider European broking market sparked by the potential need for Aon to offload its German, French, Dutch and Spanish businesses because of competition fears expressed by the European Commission will surely only help quality independent brokers such as Ecclesia to make further gains. Mr Koerner said it is time for the German industrial insurance market to take a step back and focus on the technical fundamentals of the business to rebuild trust and longer-term partnerships after a period of dramatic change, particularly in lines such as industrial fire, D&O and cyber. “I think the carriers need to focus on what really matters. If you look at all the larger commercial underwriters in Germany, they are announcing digital initiatives, insurtech startups and focusing on technology, which is important. We have benefited hugely from our investment in process efficiency and technology, so that our customers have true transparency and we are better informed about the risks. We spend less time (and money) on administration and more on risk analysis and innovation. “But I would say to the underwriters: do not spend too much time on the creation of your own portals and think of the bigger market-wide solutions for the benefit of customers,” he told Commercial Risk Europe. “We are seeing new capital coming into the market, especially at the reinsurance level, which is not surprising if returns of 6%-8% are available. But for now, I think we will see more of the same. Hopefully some of the irrational stuff will go away and those risks that are well presented and have good loss records will benefit and those with not such good loss records will pay more. To the customers I would say: start the renewal process as early as possible, be transparent and look for alternatives,” continued Mr Koerner. Captives have been suggested by many leading European risk managers as a good option during this hard market phase. Mr Koerner is not sure that captives are really viable for the majority of insurance managers. He did suggest, however, that insurance managers sit down and deeply analyse what cover they really need and what they can retain after the long soft market during which many, including their insurers and brokers, became "complacent". “Captives are being discussed a lot in the market currently, for obvious reasons. But I would say that, from a transactional cost perspective, risk transfer via insurance is pretty efficient. Captives and other alternative risk transfer methods are still hugely expensive by comparison and for captives you need to set aside capital that cannot be easily withdrawn,” explained Mr Koerner. “Protected cell companies are an option but they still carry a cost, are not for everybody and they are not something you can switch off after two years when the market turns. Customers really need to work with their brokers to examine the programme and ask serious questions about what is really needed and what can be possibly retained,” he said. The full interview with Mr Koerner has been published in the April issue of Commercial Risk Europe, which is available to download here. Commercial Risk is hosting a virtual Captives Management Conference on 10-12 May 2021. Drawing on the expertise of senior risk managers from across Europe, this conference will consider the key issues and also provide education and practical advice for those moving towards a captive option for the first time. It will also provide an opportunity for those who already have a captive to learn more about maximising their programmes. Make sure you register NOW for your free place.

German insurance managers advised to question what cover they really need

Want to read this article?

Read Next

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

Supply chain cyber risk concentrated in 15 top vendors with ‘below average’ cybersecurity

US insurers expected to increase casualty pricing as social inflation rises

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

Supply chain cyber risk concentrated in 15 top vendors with ‘below average’ cybersecurity

US insurers expected to increase casualty pricing as social inflation rises

Want to read this article?

Read Next

AXA P&C increases premiums by 7% as rates rise at AXA XL

Hong Kong and Shanghai to cooperate on captives and ILS

Swiss broker Kessler names head of special risks

Supply chain cyber risk concentrated in 15 top vendors with ‘below average’ cybersecurity

US insurers expected to increase casualty pricing as social inflation rises

Related Articles