Insurers fight back

During a panel debate on Monday four leading risk managers at large European corporates said insurers needed to focus on improving core competencies, in particular to demonstrate their willingness to pay claims. The sector was criticised for being too conservative and not providing contract certainty or good service for all but the very largest claims. Lloyd’s Chief Executive Officer, Richard Ward, said insurers can surely do better on claims. Claims are seen as the ‘unsexy’ part of the insurance business, but is the most important area, he said. “The nub of insurance is the payment of claims, the ability and willingness of insurers to pay,” said Mr Ward.hideThe insurer panel was asked if their companies had brought their head of claims to the forum and only AIG’s representative, Peter Hancock, was able to say that his company has a senior claims person attending. However, the insurers hit back suggesting that such a question was not representative of discussions at the conference. If insureds have issues with claims they should talk to their insurers and brokers, and not wait for the forum to do so, said Mr Ward. Mike McGavick, Chief Executive of XL Insurance, told the assembled risk managers that it is unrealistic to believe that claims disputes will not occur. “The truth is that claims arise in unexpected ways… and don’t always fit neatly into what is discussed up front. There is a potential for disputes, so it is important to choose an insurer based on their attitude to claims. Some insurers will view a claim payment as their money while others see themselves as the custodians of your money,” he said. What risk managers really want from insurers is stability and continuity, according to Axel Theis, Chief Executive Officer at Allianz Global Corporate and Speciality (AGCS). “For an insurance company to be boring is good–being boring is a good fit with a willingness to pay and stability,” he said. “Claims are the proof of the contract and are the reason for us being here,” said Mr Theis. “We learn from claims and improve the risk and future cover,” he added. “Insurance companies should not forget the basics of the business–pricing, underwriting and paying claims. Those functions should always be under our control,” he said. Core competencies should stay in house, said Mr Theis, reflecting views expressed in Monday’s risk manager panel that insurers are overly reliant on outsourced claims service providers. “Not every case is managed ideally, but let us sit down together and learn from it and move on,” said Mr Theis. According to AIG’s Executive Vice President and Chief Executive Mr Hancock, who also spoke on the panel, too often-outdated wordings exist in insurance contracts. “Claims are at the heart of insurance,” he said. “It is all about having the right kind of discussions up front.” According to Mr Hancock, insurers need to invest in new data sets in order to solve the problems faced by clients. For example, supply chain risk needs collaborative data gathering with risk managers, he suggested. Zurich Insurance has seen an uptick in demand for its supply chain cover in recent months, according to Thomas Hürlimann, Chief Executive Office of Zurich Global Corporate. “Buyers should not underestimate how long it takes to get a solution that is fit for purpose,” he said. The insurance industry’s record of innovation is poor, according to Mr McGavick. “There is real work to do to advance this industry,” he said. One example of innovation is the alternative capital coming into the reinsurance sector, noted Mr McGavick. It is only a matter of time before capital market providers become more heavily involved in the primary insurance market, he added. Mr McGavick also predicted that so-called broker facilities would be short lived. The facilities, such as Aon’s Lloyd’s market sidecar deal with Berkshire Hathaway, are ‘of the moment’ and will not be long lived, he predicted.

Insurers fight back

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