Keep the market on its toes but value relationships

The option to change insurance providers is important to keep both insurers and brokers on their toes as tenders become more aggressive during a hardening market, Spanish risk managers said. But they also urged companies to value long-term relationships that can prove particularly useful when a difficult claim hits. Daniel San Millán, president of Spanish risk management association Igrea and corporate risk manager at Ferrovial, said that although companies change insurance providers in a soft market, it is more likely in complex, or hard, conditions. When it comes to choosing a broker in the current market, he said it is important to look at its capacity for innovation when designing programmes, its retention policies and its strategies for difficult times. It is vital to seek brokers with new ideas and experienced staff who have already gone through a hard market, he continued. “For carriers, it is important that they value stability, that they take into account long-term relationships that have been built up over the years. Insurers should not put everybody in the same bag either. Underwriters must evaluate clients on an individual basis, taking into account past relationships and loss histories,” he added. Fellow Risk Frontiers Europe participants warned risk and insurance managers not to make knee-jerk reactions when selecting partners. “At Agers, we see insurers and brokers as integral parts of our own teams. They work side by side with us and help us to identify, from the first minute, our risks and coverages. Frequent changes of insurance providers, or permanent tenders of policies, are strategies that produce negative results, due to a lack of stability which hampers the technical development of the insurance programme in the future,” said Juan Carlos López Porcel, president of the other Spanish risk management association Agers and head of risk management and insurance at ArcelorMittal España. To foster trust, it is important not to constantly change brokers and underwriters, said Augusto Pérez Arbizu, director of risks and insurance at Telefónica. “We launch tenders every three or five years, depending on the programme, for fronting or consultancy services. Very often, the incumbent company wins the tender after making some changes to improve services. But sometimes we change our providers,” he explained. Adding: “We ask companies to see us as partners and to be committed to the partnership. We also ask them to offer us coverages that are not limited to programmes for which they have more appetite, but also for those where they do not have much interest, but where we need capacity. And we expect high-quality advisory services from brokers in areas such as risk management, benchmarking and consultancy.” David González, corporate insurance manager at construction group Sacyr, said breach of trust is a key reason for an insurer or broker relationship to end. “Insurance is based on trust, so a breach of trust would be enough reason to change partners. But as an insurance buyer, I have to be aware of opportunities if commercial opportunities emerge that are worth taking advantage of,” he said. Trust can be compromised at the time of a claim, in particular when promises made during the underwriting process are not met, he continued. “The question is not ‘who’ is responsible for a good claims handling process, but ‘what’. And the answer is the contract, which reflects the agreements freely negotiated between all participants in the deal. If a party comes up with a one-sided interpretation of the contract, there is a breach of trust,” said Mr González. More efficient claims handling is a big topic for Igrea, which has launched a campaign to engage underwriters and brokers to reduce the time it takes to decide whether a loss is covered or not. “All parties are responsible for the claim handling process. But insurers may play the most important role in the sense that they must prioritise the questions that they ask their clients,” Mr San Millán said. “They must aim to promptly find out whether the loss is covered or not. Policyholders and brokers can also be more diligent, but insurers are those that need to lead the process and to do that in a more efficient way,” he added. Mr López Porcel noted that building up stable relationships based on trust can go a long way towards preventing problems during the claims handling process. “Long-term relationships, clear wordings, and coverages and exclusions that are well defined and previously agreed, ensure that the machinery is well oiled to go through the claims process without setbacks. Therefore, if those topics are comprehensively worked out beforehand, it is guaranteed that the claims handling process will be successful,” he said.

Keep the market on its toes but value relationships

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Related Articles