Relentless extension of risk frontiers continues as 2019 beckons

This year’s European Risk Frontiers Survey, sponsored again by HDI Global, is published with this issue of Commercial Risk Europe and once more produces some fascinating insights into the ongoing development of the European risk and insurance management profession.

I would pick out the following high-level conclusions based on our discussions with close to 100 of Europe’s leading risk managers this year across the continent:

1) Risk and insurance managers have an awful lot of added value to offer their employers as they grapple with challenging risks such as cyber and supply chain. However, to deliver that value and raise their individual profiles, as well as that of the whole profession, risk managers face some big challenges. Many are linked to effective communication and wielding influence.

2) Discussion about how cyber and supply chain risk could and should be effectively dealt with shows quite conclusively that the sheer speed of the rise of the digital global economy has persuaded almost all companies to leap forward with their eyes firmly shut. Organisations across Europe are taking big risks on a daily basis without being fully prepared for, or even aware of, the threats. For this reason, risk managers are all too often playing catch up and the insurance sector is even further behind. Everybody feels that there is no time to waste taking a step back and taking stock, which perhaps suggests a major manmade catastrophe is on the horizon.

3) The insurance sector is undergoing transformation at a pace that does not match its historical evolution and nobody is really sure whether it makes sense and where it will lead. The M&A trend continues apace in both the carrier and broker markets. There are clearly logical justifications for these moves as ever bigger and more diverse multinationals demand carriers and brokers that can truly meet their international risk management and transfer requirements. But the majority of risk managers in Europe are worried that these deals are being done to satisfy the needs of investors alone, and the strategic benefits for customers are dreamt up as the ink is drying on the contract. The lines of demarcation between carrier and broker, reinsurer and insurer, and everything in-between, are increasingly blurred. The whole risk transfer chain remains bloated with cost that risk managers find opaque and often difficult to understand.

4) Insurtech is coming to the commercial and corporate insurance market but nobody really knows how, what, where, when and, indeed, why. Big data is clearly the answer to a number of the market’s big challenges. But do not throw the baby out with the bath water. Today’s complex, fluid and often very niche corporations still demand the human touch and bespoke solutions. Nobody wants commoditisation at this end of the market, and the management consultants and IT gurus need to take note of this or they could well advise their insurer customers out of business.

5) Do not forget that the whole point of insurance is to pay valid claims in full, on time and without dispute when they occur. The very last place that a risk manager wants to find themselves is in a boardroom trying to explain why they spent all those premiums over the years but cannot actually guarantee claims payment. Not surprisingly, there is general support for the claims initiative launched by Spanish association IGREA. It challenges insurers to agree to liability or not within 30 days, clarify the roles of all those involved in the process at the outset, and make at least an initial payment within 60 days. But, as ever, the devil remains very much in the detail. The onus is as much on the shoulders of the customer to help insurers meet such demands by delivering the information needed swiftly and in the correct form. This is a fundamental debate that needs to be taken further.

These key themes also cropped up regularly during our own series of lively conferences this year, held in London, Belgium and Spain in partnership with risk management associations Airmic, IGREA, Belrim, Narim and, of course, Ferma. They also featured heavily during discussions we hosted with ANRA in Italy and the GVNW in Germany.

These personal and sectoral challenges represent both challenges and opportunities that will not go away. We at Commercial Risk Europe will continue to provide a central platform of discussion and debate for all those active in the risk chain throughout 2019. Hopefully, we can also help identify the kind of solutions that were celebrated at the European Risk Management Awards in Brussels last month. We thank you all for your continued support and wish you all the best with your renewals and a hard-earned year-end break.