Engagement and co-operation between risk teams, c-suites, brokers, and insurers is crucial in a challenging insurance market, according to panellists at the RIMS Australasia 2020 Virtual Summit.
Some of the region’s leading brokers and insurers discussed rising premiums and reduced appetite among global insurers, following years of poor profitability and the Covid-19 pandemic.
John Donnelly, head of global placement at Marsh, said insurance buyers should prepare well in advance of renewals to avoid potential problems.
“Start the process early, have an engagement plan and talk it through with the c-suite,” he said.
Donnelly said organisations should “articulate improvements to the market” around risk to ensure smooth conversations with insurers.
The Marsh executive said he hoped “we might get around the cycle more quickly than expected”.
“I don’t feel as negative now as I did at the beginning of the year. Sure, prices will go up for some time, and buyers are struggling, but capital providers are showing the confidence to invest in our industry,” he said. “Supply still exceeds demand, but it’s still a cautious underwriting approach.”
Chris Langham of AXA XL was not as hopeful the hard-market and reduced capacity phase of the cycle would pass quickly.
“It’s not just a story of rates; it’s a story of changing terms and conditions, line-sizing. I think nearly every carrier is in some sort of remediation process which will affect capacity,” Langham said.
Langham said preparation was vital for insurance buyers.
“My advice to buyers would be to get in there early, be very transparent around what you are trying to achieve.”
Langham feared the third quarter would be “challenging in terms of rate increases”. “It just seems to be rapidly unfolding,” he said.
Lynette Schultheis of FM Global emphasised the need for a robust risk management approach.
She said practical steps like ensuring sprinklers were working, keeping expensive equipment out of flood risk spots, and preparing for storms and flood damage would be viewed favourably by insurers.
She said companies should “think about what your emergency response plans are”. “Dust off and review those plans and determine how best to apply your resources,” she added.
Tim Plant of Zurich Financial Services was asked whether the insurer-broker-buyer dynamic would ever return to normal after the global pandemic.
He said he hoped face-to-face discussions would return soon.
“We are all leveraging 10, 20, 30-year relationships. [Google],” he said, adding video calls “were no substitute” for getting out in the market and understanding clients and brokers’ needs.
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RIMS Australasia 2020 Virtual Summit: DAY FOUR: 2. CEO Panel: Plan, prepare, engage