Intense competition drives innovation and service among large insurers

The big corporate insurance carriers are also busy expanding their geographical reach to newer markets in Asia and Latin America, working hard to court the major producing brokers and focus growth on specialty lines, in their efforts to keep the best business, win new accounts and maintain profitability levels. These were the key messages drawn from a series of high level interviews with the leading corporate insurers carried out during the AMRAE conference in Deauville earlier this month. For insurance managers with larger French and European corporations this reaction to the stubbornly soft to flat market conditions is good news and a sign that the market works as it should do. hideFor the insurers it poses an increasingly tough management challenge as they seek to raise service levels and differentiate themselves to protect favoured accounts at a time of low interest rates and rising combined ratios. This is why so many of the insurers and brokers are convinced that Solvency II could finally spark a harder market towards the end of this year as it will add yet another significant cost line to already stressed margins, or at least they desperately hope so. The recent news from the European Commission that it has opened the door to transitional measures that could see large and important chunks of the new regime delayed as far as 2023 could, however, dash these hopes and condemn the carriers to an eternally soft market. Reports just published by Moody’s and Standard & Poor’s state that the EC’s latest thinking could severely limit the market disruption that they originally feared and probably prevent a rapid consolidation in the market that ultimately would have led to reduced capacity and higher rates for buyers. Back in the real world the market remains healthy for French and wider European risk and insurance managers if the evidence from the big insurers during AMRAE can be relied upon. Following are the key points from interviews with seven of the biggest players. PHILIPPE ROCARD AXA Corporate Solutions “We have formal commitments to clients but this was not enough, we also needed to make commitments to the brokers as they are involved in the business in almost all the main countries.” Philippe Rocard, CEO of AXA Corporate Solutions, was positive about the year-end renewal for his business at its annual press lunch during the AMRAE conference at the start of February in Deauville, despite the continued high level of competition and soft to stable conditions. He confirmed that turnover would be ‘flat’ for 2011 overall against a backdrop of still depressed economic activity. But he did say that the group had managed to achieve rate increases overall of 3.9% in corporate property business and 2.7% in liability lines during the year-end renewals. AXA Corporate Solutions also managed to retain some 96% of its customers at this renewal, said Mr Rocard. Régis Demoulin, chief commercial officer at AXA Corporate Solutions, said in an earlier interview with Commercial Risk Europe, however, that the group was prepared to walk away from unprofitable business and would focus on improved service for quality and long-term accounts to maintain volumes and profits. “Our strategy remains unchanged: we aim at maintaining long-term relationships and proximity with our clients and brokers in what appears to be a successful strategy when we see the level of our retention rate. Therefore, we prefer to module our underwriting policy according to the quality of their risks. If we are asked to decrease our rate although the quality of the risk has not improved, we prefer to reduce our part in the insurance programme. In any case, we look at each account individually,” he said. To help drive growth in this competitive market the group has introduced a new set of service commitments for its key brokers. “We have offered these engagements to customers for four years now and we thought in the magic triangle of risk, comprising risk manager, insurer and broker, we could not leave the broker out of this. We have formal commitments to clients but this was not enough, we also needed to make commitments to the brokers as they are involved in the business in almost all the main countries,” Mr Rocard told Commercial Risk Europe after the company’s press lunch during the AMRAE conference. The company also continues its annual service commitments to customers, expanding and enhancing its international network to improve its global programme offering and is extending its MATRIX loss consulting service to customers and is targeting larger medium-sized businesses too. JEFF MOGHRABI ACE “Key areas are captive servicing and legal compliance. These are no longer secondary concerns; there is a real concern about compliance and whether the right premium is being allocated. Fiscal authorities are paying a lot of attention to this around the world.” Jeff Moghrabi, country manager for France at ACE, said that the focus for him is profitability rather than growth. He said that, despite the competitive market, ACE did manage ‘good growth’ on accounts where it could really differentiate itself such as in financial lines, EIL and information technology where the newer capacity finds it more difficult to compete than in the more commoditised traditional P&C business. He said that overall ACE had defended its book of business quite well in France at the renewal. Some business it decided to let go because some lines, particularly property, are seeing unprofitable rates. Some accounts have been hard for the brokers to place, particularly those with not so good loss histories, he said. “It is flattening generally but otherwise we are still seeing some accounts reduce by 10–15%,” said Mr Moghrabi. As with many of his peers Mr Moghrabi is somewhat perplexed by the level of competition in the current market and suspects that some may be storing up problems for themselves soon and there is no room left for error. “Capacity remains abundant in this market and there are still a lot of new players despite the competitive conditions. Why? I don’t know, I ask myself every day but frankly they are still producing financial profit. The real long-term players are looking at the accident year loss ratios to see if they are really making an underwriting profit. There is no doubt that prior year development in the market has gone beyond 100% combined ratio since 2009 and no one can convince me that they are making money in this interest rate environment. So there is no margin for making mistakes this year,” he said. In this market the key for ACE is to focus on its strengths and offer more to buyers, said Mr Moghrabi. “Our big issue over the last 18 months and which is recognised by the market as a whole is how to give a homogenous service to all buyers of international programmes. We have extended the coverages available under such programmes to include areas like accident and health and the like. There is rising demand for this business partly because some of the big players retreated from this market in France so we asked ourselves why can’t we offer this in financial lines and marine and therefore play on many different levels,” he explained. Mr Moghrabi concedes that the global programmes market is not easy currently as buyer expectations and demands for consistency, certainty and compliance rise and the big insurers cannot guarantee totally consistent service across all lines. But he said work is underway to constantly improve its offering. “We are focused on this and it has given us higher visibility and results in this market. This year we are particularly keen to extend the package to include some of the lines mentioned above such as marine, financial lines and information technology—these are areas where the customer really wants to buy the same thing. Other key areas are captive servicing and legal compliance. These are no longer secondary concerns, there is a real concern about compliance and whether the right premium is being allocated. Fiscal authorities are paying a lot of attention to this around the world,” he said. Looking ahead Mr Moghrabi said that service will remain a big issue and ACE will continue to ‘hammer’ the point that captives and international programmes are essential. It will continue to develop new coverages such as data privacy protection, EIL and marine loss prevention and standalone terror cover in tricky territories such as Iraq where it just placed a coverage for a French company. ACE is also enhancing its offering for brokers. “We have evolved our model and found intelligent ways to communicate with our customers and brokers. Many of the customers deal with us locally in various countries and want to deal locally but we also have a central resource to help navigate the company. We created global account managers and now have 20 of them who act essentially as facilitators for the brokers and risk managers and also increasingly on the claims side. They deal with any rough edges and can form a network rapidly to help clients and brokers,” he explained. THIERRY VAN SANTEN AGCS “I have a feeling that counterparty risk is not being properly assessed by many companies and the insurance buyers of groups need to be asking more questions and for more information about those companies that are insuring their property and liability for the next 15 to 20 years.” Thierry van Santen, former president of AMRAE and FERMA and now country manager in France for Allianz Global Corporate & Specialty, said that much of his first full year in charge was taken up with the reorganisation of AGCS’s business in France as a single entity which was created in October 2009 through the merger of its and AGF’s operations. At the same time he had to ensure that management did not become too bogged down with internal matters and remained focused on long-term relationships with quality clients on a mutually profitable basis, and not with trying to chase the rates down. “I had a clear vision of what we wanted as underwriter and with client relationships—it was simply profitable growth which is easy to say but not so easy to do! You have to win customers who share the same values as yourself, people who want to work with you in the long term and seek a long-standing partnership with a robust company. We want to work with people who are risk managers within their organisations not keen to buy insurance as a commodity. At the end of the day the good customers pay for the bad and if you have too many bad customers then the good ones leave,” he explained. Mr Van Santen said that the year-end renewal went well for AGCS because it enjoyed a high retention level despite the fact that it was not aggressive. “We did not want to be volume-focused and targeted the business that we wanted. At the end of the day we were more successful than I thought we would be despite it still being a very competitive market,” he said. Mr Van Santen said that AGCS gained six or seven very big accounts while some were lost because it decided not to fight for them and heard that they went for discount prices in some cases. Some AGCS customers stuck with for ‘strategic reasons’ but most movement was purely price-based, he said. “At the end of the day there were very few accounts on the market because there are many long-term agreements and those customers who are not happy do not see their accounts ending on the same day. I got the feeling that many clients tried to consolidate their relationships rather than seek new markets. But every company has their own strategy and I can understand it if customers look for the cheapest option in some respects,” he continued. Mr Van Santen is not sure that all customers are carrying out adequate assessments of some of the new competitors that are winning business in this market. “We all know the market is underpriced technically and when we see accounts move because we are not prepared to underwrite some programmes at uneconomic prices then you know there are newer players that are prepared to fill the capacity gap. They may have strategic reasons to do so but some of them I have not even heard of before and some I know a little about. I asked myself—if you join Allianz which is a €600m–700m company in France, €3–4bn as AGCS and €100bn for the group you know where you are. “The other day I met an underwriter who worked for a company I had not heard of and asked him how many people they had and they had two people and €2.5m of premium income. The gross written premium was no more than €60m and it was very unclear who was behind the group. I asked myself if I were a risk manager again and the CFO asked me about this company with which we insured our business I could do myself a lot of harm. I have a feeling that counterparty risk is not being properly assessed by many companies and the insurance buyers of groups need to be asking more questions and for more information about those companies that are insuring their property and liability for the next 15 to 20 years,” he said. Looking forward Mr Van Santen does not believe that the market will soften further and noted that even at the renewal just past buyers did not see many significant decreases, even in property. He also believes that as conditions tighten buyers will opt for those insurers that can offer the service that they need, particularly if they have cross border operations. “The big players decided to be more careful. It is nice for the buyer to have fresh capacity coming along but maybe they will not be able to survive for too long and also remember many of these newer players do not have the distribution network needed in this market. Risk managers today need a strong firm with a worldwide network to issue paper and capacity,” he said. DOMINIQUE GUéRIT HDI-Gerling “We are pragmatic and have been able to make the best use of our group financing to grow our market by 15% in 2010 and become accepted as a lead provider in the property market.” HDI-Gerling, the Hannover-based German insurance group that also includes Hannover Re and is part of the Talanx group of companies, is sometimes referred to as one of the aggressive new kids on the block by rivals, brokers and buyers. This is not really entirely fair given that Talanx companies expect to report premium income of about €22bn in 2010, is the number two industrial insurer in Germany behind Allianz and the third biggest insurer overall and 11th biggest in Europe. Moreover the group has a long pedigree in industrial insurance as HDI-Gerling was created through the merger of the former HDI specialist mutual industrial insurance business, and Gerling Konzern in 2006 after Talanx acquired the Gerling group business. The group also has had an operation in France for 10 years now and it is the second biggest industrial insurance operation after the German home market. But HDI has a long-term game plan and, while it has expanded its global reach rapidly in recent times, it does not tend to pile into markets with a ‘gung ho, hang the cost’ attitude. Though competitors that have a longer history in the international industrial insurance marketplace and that may have recently lost business to the group, which reports a 15% growth in French business in 2010, may beg to differ at times. Dominique Guérit, head of HDI-Gerling’s business in France, said that it is perhaps in a different position to others in the market currently and can therefore maybe hold a different view. “It is a tough market but we can still find a decent level to work within. There are cases when a client is not too happy with their current insurer and we are happy to find a solution in such cases. We are often able to do this because we are smaller and able to bring a better service and focus on the client. We are pragmatic and have been able to make the best use of our group financing to grow our market by 15% in 2010 and become accepted as a lead provider in the property market. In the liability market we have focused on industrial accounts and not financial firms as such. We remain strong in this sector. Rates are still low in liability and in some cases still going down and clearly we are seeing more growth in property than liability,” he explained. Jens Wohlthat, main board member for international industrial business at HDI-Gerling, said that he is ‘entirely happy’ with his French colleagues who he said have acquired lead mandates for global programmes. “Obviously we hope to build on this. Once you acquire such an account you have to keep it. This is a strong step and we are very happy to see this and give all the support from head office that we can,” he said. Mr Wohlthat explained the strategy further as the business seeks to grow its cross-border business in a tough underlying market. “It takes time for people to explain our way of delivering service. We may appear to be a relatively small operation on the ground that offers to deal with large pieces of business. You cannot do this overnight. You always have to have discipline on the price of risk transfer and we believe in multinational programmes we can compete on service. For the risk transfer element we can act as co-insurer or lead. The pricing is the way it is but if we are willing to take business on as a co-insurer we may as well act as the lead. Obviously pricing needs to increase again but no-one can predict when it will,” he said. Etienne de Varax, head of liability business at HDI-Gerling in France, said that one of the biggest challenges for customers and their insurers and the scope for innovation in 2011 is related to governance and the role of the risk manager when dealing with the board and, critically, the provision of proper information. “One of our top risk managers said that his key role is to work on risk mapping for his presentation to the board and so the flow of information is key. We have to see how we can provide better information for the risk manager and they must try and give us better information to underwrite the business more effectively. In France we have now decided to work on D&O for corporate business. It makes sense to be involved in D&O because it helps develop a relationship with key individuals and groups. We started this line on January 1 and have already been able to gain access and have been well received,” he said. The realisation that to be a serious player in the cross-border market a carrier needs to be able to offer a wide range of specialty as well as standard coverages is one of the reasons why the group recently agreed terms to buy specialty Dutch insurer Nassau Property & Casualty, explained Mr Wohlthat. “We signed an agreement to acquire 100% of Nassau that is closing but not quite there yet and we aim to close the acquisition in the second quarter of this year, latest. The main part of the business is Dutch, therefore we would like to find a good way to bring together our existing Dutch industrial insurance business with Nassau where there is thankfully hardly any overlap. Nassau is a specialty insurer and so there is hardly any clash,” he said. “There are also other countries in Europe where we do not have this kind of specialism so it was another good reason to acquire this business. We can use their knowledge and strength in these areas such as D&O, PI, financial lines and their existing reinsurance relationships for these lines and help build similar business around continental Europe where we operate as HDI-Gerling Industrial. We are happy with our brand and so are our customers and stakeholders. Customers have chosen our brand and want to work with us. The challenge now is to integrate Nassau and its brand but at the same time keep its independence and maintain the entrepreneurial way of doing business. We need to find the right balance and our challenge is to do this well. The aim is clearly not to limit the capability of the business but to enhance it so that they can benefit from our strength and spread across Europe,” continued Mr Wohlthat. PAOLO RIBOTTA Zurich “There are areas where prices have dropped over the last 10 years below this level and are so far off that unless you are a magician you cannot make money...The supply chain is clearly pushing the boundaries of what was traditionally insurable and what was considered uninsurable. There does not have to be an accident or damage. We have to go out and see our markets, customers and brokers really to discuss and understand these changes so that we can innovate and help them manage the change.” Paolo Ribotta, CEO of Zurich France, said that you have to be an underwriter blessed with magical powers to make money in some lines in this current market and the only way ahead for the serious international insurer is to help customers strive to cope with the complex emerging risks in the new knowledge-based economy. “There are areas where prices have dropped over the last 10 years below this level and are so far off that unless you are a magician you cannot make money. We should all have roughly the same technical price. Some business has become too commoditised and this affects the price and is quite normal but when prices are 50% off the required premium it is not magic and you can’t provide an equilibrium,” said Mr Ribotta about the current state of the market. Mr Ribotta took the opportunity to remind the market that insurers like Zurich are not NGOs but have a duty to provide a return to shareholders. This is made all the more difficult when such long-term players have to compete with newer short-term entrants, he said, echoing the words of Mr Van Santen at AGCS. “The need for a technical price is even more important in highly technical lines such as engineering because you need a level to ensure a healthy level of profit and you have to ask what is bringing new capacity to such markets. When you look at the capital markets and they may decide to invest 5% in the insurance market, it may look like it is a gamble because in such lines you can lose everything if the pricing is not right. Are such lines volatile? Yes very much. There is an increased frequency in natural catastrophe events and new developments and you have to take a longer-term perspective as an insurer,” he said. For this reason Mr Ribotta is not sure why there is so much capital currently in this market particularly given that there is ever more focused regulatory pressure and demanding clients. He urged caution to customers in their choice of carriers and to think about how they would justify that decision with board members. “Above all you need a transparent relationship with your clients and brokers. You can publicly see all the data and information concerning it with Zurich and if you want to do a good job in this market that is what you need. It is a free market but in any decision an informed decision is a good decision and risk managers need to be confident that they can tell their senior managers that they have made an informed decision,” he said. One of the key recent trends spotted by Zurich in this market is the tendency of customers to outsource risk management and servicing of that risk management to brokers and insurers because they understand customer goals and have processes and tools in place to carry out the service. Zurich is ready to offer such a service, particularly in the area of complex international covers, he said. “We have invested in this area for some time. A big question currently is whether insurers are really able to offer global programmes and if processes are seamless and swift. How long does it take to issue a policy, what are the costs in the chain and are there any duplications? This is not adding value necessarily because it should be embedded in the service and enables the chain to work more efficiently for all involved and avoids replication in the chain,” said Mr Ribotta. The Zurich France CEO also said that another clear trend among European customers is the shift from a more capital intensive to knowledge-based industry. This means a shift from industrial sites to services and in turn this means that there is an increased need for liability-type covers, and not just public liability but also employers’ professional liability, professional indemnity and D&O, he continued. The third big trend identified by Mr Ribotta that demands a response from the insurers is changes to corporate risk profiles that are being fuelled because a lot of companies have reviewed the way they create profit in the first place, where they are doing business, what processes are being used and how the production process is carried out and by whom. “Look at Boeing for example. It used to manufacture everything but if you look at the new Boeing 787 it is a concept and intellectual property of the company but they use a big bench to assemble it. This kind of shift creates new risks that need to be mapped and understood. Related to this shift there is also the need to reduce costs and there is always a price (which is the increase in risk) attached to the cost reduction which in themselves represent increased costs,” he explained. “Our role as insurer is to flag these trends and help the risk manager address such issues even before coming up with the insurance solutions. Secondly we must also to some extent deliver innovation. The supply chain is clearly pushing the boundaries of what was traditionally insurable and what was considered uninsurable. There does not have to be an accident or damage. We have to go out and see our markets, customers and brokers really to discuss and understand these changes so that we can innovate and help them manage the change,” he said. Daniel Hofmann, chief economist at Zurich, agreed that supply chain and reputational risks are key challenges looking forward and will force the pace of innovation. “Reputational risk is one area that needs to be prepared for and the changing supply chain enhances this risk. You have to ask how do you deal with the unknown, unknowns and try to reduce it to the known, unknowns and then issue standard operating procedures that can lead to tangibles with which risk managers can actually work. We still sell standard policies because people still need them. But we already have moves by the credit rating agencies to rate corporations now based upon their enterprise risk management capabilities which is a significant step,” he said. GUY LALLOUR XL “The natural catastrophe element of the property business will probably be the catalyst for change as we are seeing sharp increases in exposures, especially in the US, and they can account for 30–60% of the technical premium. If the San Francisco earthquake of 1906 were to occur today then you would probably be looking at losses of $300–400bn.” Guy Lallour, country manager for XL, was more direct than most about the need for insurers to ensure they stand out from the crowd by providing superior service in such a competitive market. “There is still an abundance of capacity in the market; therefore you have to differentiate yourself with a long-term service to clients. We cannot compete in a market like this on price alone, it has to be about the long-term commitment. You have to do this by loss prevention services, continuity of underwriting policy and bringing the group-wide expertise to the clients,” he said. As an example he said XL has developed new environmental coverage, brought specialist construction expertise to France and is busy developing its professional lines business in primary lines, an import from its big US business. He said that the group is investing in such areas by hiring new people and now also has local cyber liability expertise. But it’s not easy. “There are areas where frankly we have had to sacrifice a little quantity to maintain the quality of the portfolio and the property market typifies that,” he said. Mr Lallour sees a spark for market change in natural catastrophe exposures which he said are rising fast in some areas. “We have acquired major lead positions for clients who need a more specialist service such as loss control or expertise in natural catastrophes. The natural catastrophe element of the property business will probably be the catalyst for change as we are seeing sharp increases in exposures, especially in the US, and they can account for 30–60% of the technical premium. If the San Francisco earthquake of 1906 were to occur today then you would probably be looking at losses of $300–400bn. Experts have worked out that an earthquake in Beijing could cost over $100bn. About 40–50% of this risk is insured in the US but in China it is probably no more than 5–10%. Will this be the case in five to 10 years, nobody knows? Our industry needs to set aside money for this and it is currently not always being done,” he said, adding that the same situation occurs in France too. And of course a sustained highly competitive market can store up big problems for liability insurers, especially when investment income is down and litigation up. “Equally in liability we have to take a long-term view as insurers, you have to have premiums that are in line with long-term exposures that pay the claims in future. We see more long-term exposures for industrial companies. Clearly in Europe the claims inflation is close to 10% based on increasing cost, exposure and litigation and the like. Since 2006 all the insurers have seen investment income lower drastically, it has probably shifted by 15%. In liability we receive money today and have to repay the client in three to four years’ time when the claims are settled and if the premiums are down now to a too low level what should we do?” he said. Mr Lallour said that for the serious long-term insurer in the large corporate and cross-border business the key is concentrate on a technical approach and focus on those customers who have all the tools to carry out sound risk management. The same goes for insurers, he said. “Solvency II demands that we have disciplined teams that are focused on sound risk management. This is very important because it reduces our own risks in the short-term and provides long-term stability. You need to manage your portfolio correctly for years to come,” explained Mr Lallour. For Mr Lallour specialism is also key in such a phase of the cycle when fresh capacity is abundant. “Specialism is important because it can overcome the price instability problem. I really worry about the pricing inadequacy because it does not represent the real cost of risk particularly in property but also to a lesser degree in liability. For this reason for us specialist lines such as professional lines and D&O are a focus,” he said. Mr Lallour agreed with his peers at Zurich that economic change is a key challenge for customers and insurers because the industrial process is increasingly broken down into segments. “Today you have different suppliers who provide the products, the components and know-how giving more possibility for errors and omissions claims. It is no longer adequate to provide your best effort, whenever there is a claim there is a person at the centre of a claim who is responsible and deemed to be guilty. Media exposure is more important and we are moving fairly quickly to a common law position all over Europe therefore liability and D&O and EL and all sorts of exposures in France and the UK such as stress at work are becoming more significant. Cyber crime could cost $500 per client whenever a list is stolen and that can add up to a big number,” he said. Another line of business that is growing is marine, aviation and transport, said Mr Lallour. He explained that, over the long term, commercial transport grows twice as much as gross national product as more goods are moved around as a result of the changing, global nature of the production process. He sees this as a definite area for growth and also explains the rise in interest for business interruption and loss prevention in global programmes. “Look at an auto manufacturer, 25 years ago, they produced the whole product, now they buy the components from others and assemble it. It is a very different ball game. Property damage remains important but it is giving way to business interruption and all the attached liabilities. This is why loss prevention is becoming so much more important as a way to control the supply chain and make sure the business is not interrupted. Loss prevention is therefore becoming more important for global programmes,” he said. And, for Mr Lallour, this changing nature of business presents exciting challenges for risk managers and global insurers alike as they grapple with the new environment and seek solutions. “Some 25 years ago we saw the rise of the concept of the manufacture output policy, as people tried to work out what cover was required when the product left the factory. Now we think about the liability elements. We have to reach an agreement on the share of this liability and how to split the rest of it. This is what is so fascinating about the business of insurance. We are of course not capable of matching our clients’ knowledge of their own business but we do get close to a large number of companies in a variety of sectors and so we are in a very privileged position to develop solutions,” he said. KELLY LYLES Chartis “The ice is not hard enough to skate on yet but it should be hardening in the next renewal at 2011 year end.” Chartis is also focused on specialisms to ensure profitable growth can continue in the tough market, according to Kelly Lyles, general manager France. She told Commercial Risk Europe that the group has some strong niches such as financial lines, casualty-liability and energy that makes it stand out from the crowd plus some ‘interesting’ coverages that are offered in a different way such as through loyalty programmes. Chartis also writes a good deal of accident and health business which is not so common in this market. And it has recently launched two new divisions for aviation and construction which she said are doing very well, especially aviation. Ms Lyles said that it is difficult to be too general about the state of the market and its strategic response because it adopts such a client-specific approach. She did say, however, that Chartis was ready to ‘correct’ those accounts that needed it. “We approached the brokers and clients well ahead of renewal with a view to being open and transparent on our strategy. There was definitely business that we walked away from, but we ended the year better off than we expected, and fewer accounts than we thought did not renew. Last July we found the market very competitive, and so for the January renewals we worked to find creative solutions for those clients who were going to find the renewal tough,” she said. Ms Lyles said that in some cases where they did think they would have to walk away from some accounts, they were able to keep most of them. This was often because the customer could not find the reductions in price they had sought on equivalent terms, she said. “Motor business did harden and it usually is the first line to move, so this was a reassuring sign. General liability is broadly hardening and there are positive signs on rates even in property. The ice is not hard enough to skate on yet but it should be hardening in the next renewal at 2011 year end,” said Ms Lyles. For Chartis the key expanding lines of business are aviation, construction and also mid-market, said Ms Lyles. “SME business and consumer areas generally are larger growth areas. Definitely smaller multinationals are a growth area too as a lot of these kinds of companies are setting up operations overseas now and need local coverage,” she added. Global programmes are also a focus for Chartis. “One of our unique selling points is our owned network which is broader than anyone else’s. We realise that there is still room for improvement and we are working on that every day,” she said. Ms Lyles said that Solvency II was not really a big topic of discussion with customers currently but Environmental Impairment Liability is. “EIL has been mentioned several times. In some respects you can call it the new D&O because this market is probably at the point where D&O was 20 years ago. Legislation has arrived that gives directors new responsibilities, so a lot of companies are starting to look at it and we are starting to quote for the business,” she said. Ms Lyles said that product liability is another regular topic of discussion for example in sectors such as the motor industry as suppliers have problems, and customers want coverage for the whole chain. Identity theft is another big issue and, of course, capacity for trade credit continues to be a topic around the table with French risk managers. “This has improved in France which is quite a traditional market. Most of the French market buys ground-up coverage, but we have a different approach which is excess of loss-based. Our approach helps clients manage their own credit risk via the captive or just the balance sheet. “We think that our Global Limits Manager policy, which we successfully sell in the UK, will prove very attractive in the French market,” she said, underlining again the need for the big insurers to follow demand with innovative responses in such a soft general market.

Intense competition drives innovation and service among large insurers

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