Let’s get technical-Chris Smith

Adrian Ladbury: What is the plan for RSA in Europe? If you plan to continue your growth how will you do this in what remains a very competitive market?

Chris Smith: We are looking to grow in sectors that we know very well and have been involved in for many years. We don’t have offices all over the world but along with a number of companies we are looking to develop our business in multinational programmes and across Europe. We very much want to be involved in the underwriting of this business in a technically led strategy. It is relatively easy to grow in this business but if you do not get it right at the outset it is dangerous. Thus we stress the importance of professionalism and a technical approach. In this sector the customers are sophisticated and demanding. Whether it is the risk managers themselves or their bosses they expect a standard level of high service. We are only too happy to compete on this basis because it is in our DNA. We have a springboard to expand from and we want to do so on a global basis.

AL: Why don’t you have a dedicated unit for this business like others?

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CS: It is on the radar but it’s more to do with evolution. Over the last seven to eight years we had to get things in shape and moving in the right direction. We have an international network that is strongly controlled from the centre in the UK, based on a combination of our own offices and network partners. This is a strong differentiator in this market and a large part of the investment needed by a company in the sector is with the network. Some 80% of our offices are majority-owned and we don’t see the need to be 100% in all countries. The key is to do the business well and accurately, rather than try to paint the globe RSA purple.

AL: What about your long-standing relationship with HDI-Gerling? Will this continue as you both expand internationally in the same ‘space’ and after HDI finally completes its long planned IPO?

CS: We are both competitors and strategic partners at the same time and it works well. We fit well together and have a very professional relationship. They have gaps in their coverage and we have grown up together. The partnership is something that we have both learned to cherish. Whether they choose to do something different after the IPO is open to question.

AL: Which are your key focus sectors?

CS: We focus on risk-managed business where we can add value for the risk manager. Renewables is such a sector that fits our strategy because we can work in the sector and really understand it and are then able to design bespoke solutions. We believe that it is better to work in a sector where we have technical expertise rather than work in a standard risk market where we are competing with 25 other companies. We have to choose certain segments on this basis but it does not stop us doing others. We can and do work across all lines but increasingly the challenge is to get away from the restrictions created by traditional product lines and do things differently in different ways.

AL: What about innovation? Customers are screaming out for more innovation from insurers currently. How can you deliver this?

CS: Technical knowledge is the key. Being a smaller player we need to rely on brokers—the big multinationals and the larger local brokers that are increasingly prominent in this market. So we work to get to know them quite well. I know the brokers in London well from my days in that market. In line with our strategy we expect the brokers to have detailed knowledge of the risk exposures. You simply cannot play in this market without that knowledge and we always want more.

AL: Technical knowledge appears to be the big driver for you and many in this market. Skilled and knowledgeable people are therefore key for you, so how do you make sure you attract and retain the right staff in this competitive market?

CS: This is a huge issue for us in Europe, because there is big competition out there. You can attract the right people but once they have made a name for themselves everyone wants to hire them—therefore retention is the big risk. Attraction is also an issue if you are not as well known across Europe as we are in the UK, for example. This is made more challenging because there do not seem to be as many good people as there used to be. You need to take a global view and create a culture of mobility within the group so that people know they can move around.

AL: What about emerging risks? There has been much talk recently among risk managers about the apparent inability of the insurers and brokers to meet their fast-changing needs. What is your approach to this?

CS: This is one of the more difficult areas because first you have to define what the risks are and then you have to determine if the market can write them. Sometimes you will do all the work to define the risk for the customer and then have to say actually we can’t underwrite this, which can be difficult. But specialism is the key. You need to be at the edge of technology and learn lessons together, with the customers. This is the model that works.

AL: Working together with the customer is the way ahead but how does it work in practice?

CS: You have to derive the right experience from risk engineering. This starts with the underwriting of the risk and relationship with the customer. This can be developed through interest groups that can draw upon colleagues, relationships with professors and lawyers. Claims consultants who live and breathe this stuff and are right on the edge of it. Only then can you decide whether you can transfer the risk and more importantly the basis of the contract for all the parties. It is quite stressful out there and costs money but that cost is needed.

AL: Talking of the trading environment what is your outlook for the market currently?

CS: It is difficult to be innovative in such competitive market conditions. I used to have a ready view of where the market would be headed and what risk managers could expect based on the previous year’s experience and developments coming through, but it seems tougher today. There has to be a time when things change. There have been huge catastrophes in the first quarter and, based on previous cycles, you would have to say that things will change. However, you cannot say this for sure because there is still a lot of competition and capacity, despite the actual and expected costs of Solvency II and its higher capital requirements. Lots of companies appear to be playing off the longer against the shorter term and they want the market to harden but don’t want to change strategy, which makes it less likely.