The insurer’s perspective–HDI Belgium

Chris Staes, managing director of HDI Global in Belgium, discusses the key topics covered in this year’s European Risk Frontiers Survey with Adrian Ladbury. Adrian Ladbury [AL]: Will the corporate insurance markets in Belgium and Luxembourg harden this year? Chris Staes [CS]: In my opinion, we should rather ask if risk transfer is fairly priced these days. Frankly speaking, and judging from our Belgian book of business, 16 years of a softening market have led to an imbalance of the price-risk-ratio in most lines of business, especially in property insurance. In our book, there is certainly no room for further rate reductions, particularly in property insurance. [AL]: Is there adequate capacity in the Belgian market? In which areas do you see demand for more capacity? [CS]: In the Belgian market, we already see evidence of the first cases of capacity shortages here and there, primarily in the property insurance segment, but also in other lines of business. We continue to offer our Belgian clients high capacity for all lines of business, but we need an adequate price-risk-ratio and this is not the case in many property accounts. If we fail to bring this ratio back into balance sooner rather than later, I would not be surprised to see further shortages of capacity in the medium term in the Belgian market. [AL]: Are supply chains of companies in Belgium and Luxembourg adequately insured? [CS]: International supply chains of many Belgian companies have become highly complex during the last one or two decades. From our perspective, this complexity is one of the biggest challenges that both risk managers and insurers face currently. The major losses caused by the Thai floods and the Tianjin explosions, for example, were a wakeup call for many of our customers. These losses showed that one local event can cause problems all over the world because of global supply chains. Risk managers, brokers and insurers must raise efforts and combine forces to gain more control over supply chain risks. [AL]: What needs to be done to make these risks more insurable? [CS]: The key is to provide comprehensive information from the client and/or broker about the supply chains and about the underlying risk exposures. Even major multinationals, however, find it difficult to provide transparent and comprehensive information about their own supply chains and about replacement options. It is quite simple in our business: fewer information gaps increase the degree of insurability of risks. They also have a positive effect on pricing. Uncertainty, however, causes the opposite result. [AL]: What is HDI doing to close these information gaps? [CS]: At HDI, our risk-consulting unit HDI Risk Consulting (HRC) helps clients to analyse their supply chains. We support industrial companies in loss prevention and help them establish risk management systems, including business continuity management systems. HRC offers our customers access to about 170 internal engineers and experts from a wide range of different disciplines. The goal is to help our clients manage their risks and work out individual, risk-based concepts for insurance cover. HRC operates worldwide in fire, engineering insurance and marine. We have a particular focus on the identification and assessment of risks and the development of appropriate, individual protection concepts. In our opinion, this is the right way to protect our customers’ supply chains. [AL]: Is there adequate cyber insurance cover currently and how could insurers and brokers work more effectively with risk managers to develop more comprehensive cover with higher limits? [CS]: There is adequate capacity available in our view. An important prerequisite for us to write cyber cover and to offer higher limits is that we understand the underlying risk. Therefore, we require comprehensive risk information and in particular an in-depth risk dialogue with the client. This is even more important if the potential customer has a very decentralised and heterogeneous IT and information security landscape. We also need to understand the client’s needs. It is not our ambition to just sell a product. Our target is to create a tailor-made solution. We do not think it is the right approach to sell cyber policies without any risk dialogue, as does happen in some cases. Our focus in Belgium is on those clients we trust and know well. During the last two years, we managed to increase our market penetration in this product line.

The insurer’s perspective–HDI Belgium

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