Sustainable innovation and pricing needed for comm-tech firms

According to David Ralph, the outspoken senior vice president in charge of risk management at diversified Hong Kong-based telecom group PCCW, the insurance industry is failing to keep up with the pace of change being experienced by its comm-tech customers. "Our marketing people will come and tell us that we have just six weeks to get a product out and we need to be able to talk to you [insurance] guys so you can understand it," Mr Ralph said. On the broader question of pricing and market conditions, he described the continuing fall in pricing as 'scary' from a sophisticated buyer perspective. He said that comm-tech company board directors routinely benchmark insurance prices with their peers and then inevitably call on their risk managers to obtain 20% discounts. "We need to get some stability around pricing. It isn't right, it isn't sustainable and we want to make sure we will get our claims paid," Mr Ralph said. "At the same time, insurers need to maintain the resources to develop the technology and services that will support us in what we do. You need to stay relevant to us as we bring in new products and at a price that is sustainable."hideAndreas Berger, Chief Regions and Markets Officer for Allianz Global Corporate & Specialty (AGCS), told delegates that the insurance industry's business model is under stress. Against a background of low interest rates it needs to stay focused on underwriting profits, he said. "On the positive side the industry is finally beginning to move away from its 'siloed' line of business-based approach to a more cross-class and customer-centric solutions approach," Mr Berger said. "But too many companies do still have a P&L approach that is based on LOBs." Fabrice Demonge, Managing Director for West Europe at AIG, said that the insurance industry urgently needs to improve and increase its use of data analytics in order to innovate in non-traditional risk areas while ensuring it better understands the risk exposures being assumed in areas such as cyber. "But we need to encourage new blood into the industry to introduce new perspectives," he warned. "Insurance is an ageing industry and we need new people to tackle the issues facing us in a different way." Innovation is risky, said Jürgen Cherreck, Head of Underwriting Management for EMEA at XL Catlin. Mr Cherreck said that when insurers develop a new risk transfer product they need to be sure that the market will take it up. "Getting the design right, along with the price and the distribution is a challenge. If you can't price an innovative product adequately then it is hard to bring it forward. The investment that we make in people and in technology demands that there is a profit margin-otherwise it risks diluting the suite of successful products already on offer." He said. Held at the beginning of June, JLT's Mastering The Risk Landscape conference replaced the broker's longstanding Salzburg event. The firm's CTM practice leader Sam Tiltman broadened the agenda to include a wide range of risk issues impacting the sector from credit risk to the evolution of D&O liability, as well as non-damage business interruption and political/terrorism risk.

Sustainable innovation and pricing needed for comm-tech firms

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