It is the best of times…comment

Cheap cover for all remains the order of the day, despite the massive financial and economic turmoil we have all lived through in recent times.

The impressive way in which the insurance market has coped with the crisis means that customers do not have to go and grovel to the board for more, just when they would get the sack for even suggesting such a ridiculous thing.

The contrast with 2002 is amazing.

Back then risk and insurance managers faced rocketing insurance costs as their boards grappled with major financial and business risks that had never been seen before. Remember the double whammy of plummeting debt and equity prices?

I recall the FERMA conference in Barcelona in October 2001 which was a spiky affair.

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Risk managers from Europe’s leading companies asked why they, who had so carefully managed their risks over the years, were expected to bail out the mass market, through massively increased premium costs.

‘Does this market really work?’ they asked, as supposedly reliable international carriers posted massive reserve additions to cover risks that they had irresponsibly underpriced and taken on through gung-ho acquisitions.

It was a tough time that threatened the validity of the whole insurance principle. Particularly so in the high-end industrial risks market in which the concept of mass risks and mutualisation has never been that strong anyway because of its limited size.

Thankfully, for the insurance buyers the insurers learned their lessons from 2001 and got their act together.

I recall as publisher of Insurance Day newspaper in those days, working for the recently deceased and much missed Fiona Gibson, that I spent a lot of time writing about the fall of former industry leaders and then interviewing the new guard who took over the mess and promised to sort it all out.

The likes of Nikolaus von Bomhard, appointed CEO of Munich Re in January 2004, was a new breed of clinical and rational insurance industry leader who promised to introduce the same type of integrated risk management within the insurance and reinsurance companies that had been wistfully talked about for so long within the corporate risk management community.

Having reported on the near demise of Lloyd’s of London and the wider insurance industry in 2002–2004 because of a shocking lack of risk management know-how, I was sceptical.

I asked lots of annoying questions of these new boys. But thankfully my scepticism was ill-founded and the likes of Dr Von Bomhard have proven themselves equal to the task.

For this reason the current crop of problems that risk and insurance managers face as they prepare for 2011 is not that scary.

Investment conditions may conspire with inevitable reserve additions to make the next couple of years a tricky one for insurers as combined ratios creep north.

Solvency II is a sensible pain in the arse and will add cost just when it is not needed and captives are under pressure to justify their existence.

Global programmes do not work as they should do and need to be sorted out. The European Commission needs to rethink its view of broker remuneration under the Insurance Mediation Directive [IMD] and, guess what, it may also introduce an idea for mass tort in Europe next year.

But compared to a fivefold increase in premiums as in 2002, just when buyers needed them like a hole in the head, it really is not so bad out there.

We at Commercial Risk Europe have really enjoyed a great first year reporting the news and opinions that matter for Europe’s risk and insurance managers and will continue to do so next year.

It seemed at the start of this year that we would spend all year writing about downgrades, insolvencies, massive rate hikes and bad news all round.

Rather we spent the year writing about efforts by the risk and insurance management community to take advantage of the huge opportunities offered by this economic change to genuinely further the profession.

Each one of the nine roundtables that we held this summer for the annual Risk Frontiers survey tackled some big challenges faced by risk and insurance managers across Europe.

But it was striking how positive most participants felt about the outlook for the profession.

This was a very different year to 2002 when I interviewed a lot of very depressed underwriters, brokers and risk managers along with those implausibly, but ultimately justifiably, optimistic, new CEOs at the insurance companies.

The Risk Frontiers project has shown there is much room for optimism for this profession. Our readers enter 2011 faced with many big challenges but also some very big opportunities that will require skill and courage in equal measures to discover and manage.

To help you identify and cope with the challenges and exploit the opportunities, CRE is investing significantly in our news gathering, analysis and distribution service in 2011.

CRE deputy editor Ben Norris joins us full time and our highly experienced reporting UK team of Tony Dowding and Garry Booth will continue to cover the UK and international risk and insurance markets. Rodrigo Amaral, our Madrid-based Iberian correspondent, is now also our full-time French reporter and is spending a lot of time in France with AMRAE and the rest of the French market.

We have also just signed an agreement with Herbert Fromme, the leading risk and insurance reporter in Germany, to cover the German-speaking markets for us.

And we will shortly also announce the appointment of a highly experienced reporter to cover the central and eastern European market.

We concluded the year with a great meeting of industry leaders at the Malta International Risk & Insurance Congress following our Solvency II debate in Brussels in spring.

And we will be working closely with your national associations to deliver a number of high quality targeted and frighteningly independent seminars next year that will be totally focused on what you need to know to do a better job.

Above all we will use this expanded reporting team and discussion platform to find out what really matters to you, the European risk manager, and report the answers in a fiercely independent way.

Our annual Risk Frontiers survey, sponsored by XL, and series of management reports such as the one we have just published on global programmes, sponsored by Zurich, are highly valuable projects that would simply not happen without our sponsors.

CRE would not be published without our founding partners who have committed to a long-term investment to make this industry resource work.

But the basis of this relationship is pure. Our sponsors and advertisers invest in us because they believe that the European risk and insurance management community needs an independent platform and forum through which critical industry matters can be debated and discussed and they trust us to carry this out in a mature and responsible manner.

For this reason we accept no efforts at editorial control and our sponsors have made no attempt to exert this.

I have written for this industry for almost 25 years now working in many different roles—tea boy, reporter, editor and publisher. And I have to say that at no point in my career have I felt as emboldened to say what needs to be said and push back the barriers as now.

Please keep on reading CRE and sending back your feedback, negative or positive, whenever you feel like it. CRE has only been a success so far because we have enjoyed a huge amount of success from you the readers. Please keep sending in your feedback, comments and ideas. And when you have concluded those year-end renewals, relax and enjoy a happy Christmas and new year break.