Risk managers give insurers qualified approval but ask for more

The panel of five European risk managers scored the insurance industry between six and eight and a half out of ten for its overall performance. Chris McGloin, Vice President Risk Management and Insurance at Invensys, rated the insurance industry’s performance a respectable eight out of ten. However, when it comes to the industry’s commitment to change, he scored it just four. “Willingness to pay, I would score five or six, but ability to pay would be a nine,” added Mr McGloin who is also Chairman of Airmic. He went on: “Unfortunately there is not yet a real focus on creativity and innovation in the insurance industry. It is unquestionable. Innovation in insurance has not taken a quantum leap to where clients now find themselves in terms of the risks they face.”hideRisk managers can be unfair on insurers, conceded fellow panellist Andrew-Richard Bradley, Head of Group Risk Services at Nestle, who rated the insurers overall performance most highly. “Clients don’t always pick up on innovation,” he said. Annemarie Schouw, Risk and Insurance Manager at Tata Steel in Europe, and President of the Dutch risk management association Narim, scored insurers eight out of ten, adding that she had an excellent experience with insurers following a recent large fire at her company. Tjerk van Dijk, Director of Insurance, Stork and Fokker, who scored the industry at six out of ten said there is a lot of room for improvement at insurers. While insurers are good at large claims, smaller claims also require attention, said Mr Van Dijk. He believes that insurer claims departments are under-resourced and that the sector relies too heavily on outsourcing to third party claims service providers. “Insurers are not able to think for themselves anymore, they rely of third parties to do their thinking for them, and at a high cost,” he said. DEPARTMENT OF PRE-CLAIM Risk managers are increasingly using scenario analysis and getting insurer commitment on how policies would respond to certain claims, explained McGloin. But it is difficult to get insurers to change the insurance policy to reflect those commitments, while insurers interpret wordings differently from one day to the next, he said. “We get agreement on intention but not on how it is evidenced in contract,” said Mr McGloin. Reflecting the challenge for insurers, Mr Van Dijk, noted that new wordings can be seen as a threat because risk managers will not want to be guinea pigs for new insurance products. “Innovation is only innovation when you can make money out of it,” said Mr Van Dijk. “Environmental liability insurance, and now cyber, are given as examples of innovation, but what interests management is the cheap financing of the risks we face.” Insurers price new products high to reflect uncertainty, but they should price products in order to attract customers, or they won’t be successful, added Mr McGloin. Insurers could put more effort into the basics, rather than innovation, said Mr Bradley. “You can’t ignore issues like wordings and claims because they are not sexy, but they are fundamental,” he said.

Risk managers give insurers qualified approval but ask for more

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