A working group of leading risk managers has officially been launched to help spur innovation in the insurance market and develop “revolutionary” thinking on risk transfer solutions. It wants to work with the insurance industry to shift away from a perils-based approach to risk, in favour of a focus on risk outcomes.
Set up by risk modelling and analytics firm Russell Group, the group of more than 20 cross-industry risk managers from large corporates is chaired by David Broughton, head of insurable risk at Centrica, with Neil Timberlake, group insurance director at Land Securities as vice-chair.
In the first quarter of this year it held meetings with senior executives from eight major (re)insurers, to explain how corporate needs are transforming and spur a revolution in risk transfer solutions.
The group has now established four pillars of activity:
Pillar 1– Define and create a business resilience risk transfer product and enabling data analytics.
Pillar 2 – Act as an incubator for insurer product ideas.
Pillar 3 – Consider innovative solutions to make better use of captives and other more readily available risk transfer solutions.
Pillar 4 – Promote the emerging corporate resilience need and gain support from established government and market bodies.
The group was originally established more than three years ago to consider connected risk and how data and analytics provided by Russell Group could help quantify exposure. But it explained that the focus has now shifted more to corporate resilience and viability.
As Mr Broughton explained: “It is vital that large corporations are able to transfer a substantial amount of intangible risk, to release capital to fund future growth and ensure the sustainability of their companies. They do not expect to do this in the way of traditional marketing, but by forming close partnerships, retaining a large percentage of the risks, and using any appropriate financial instruments available in the wider financial markets.
“We need to move away from peril-based products to considering risk from an outcome perspective,” he added.
Suki Basi, managing director of Russell Group, said with resilience high on the boardroom agenda of every company and insurer, the working group offers the opportunity to “strengthen and deepen the relationship between corporates and insurers for the long-term strategic benefit of all parties”.
“So, in launching our working group, we are urging (re)insurers and corporates to be forward-thinking and have the imagination to create connected solutions in a changing world,” he added.