RIMS Risk Forum: Views from the top of the insurance industry

JOHN DONNELLY
HEAD OF PLACEMENT,  ASIA-PACIFIC
MARSH

What is the biggest challenge facing corporate risk managers in Australia?
Corporate buyers will be challenged managing internal stakeholders with the changing dynamics in the Australian insurance market. Although the market is not yet experiencing wholesale changes, there is unquestionably a tightening in pricing, something buyers have not experienced for a number of years. The increasing number of major cyber attacks is another issue confounding corporate risk managers as they navigate the raft of insurance products being developed. The nature and scale of the attacks are becoming more complex, which is challenging buyers and insurers alike.

What is the insurance outlook for the next 12 months?
The outlook continues to be positive in the main. The capital in the global market continues to increase and, so long as supply exceeds demand, the soft market pricing will remain. Specifically in Australia, corporate buyers in high-hazard industries and/or with large losses will likely experience property-rate increases, due to reduced competition in the market for risks with these characteristics. Good-quality, well-risk-managed buyers will still be highly sought after by major insurers, albeit the generous rate reductions of recent years have all but disappeared.

How can the insurance industry improve the claims process?
Insurers’ claims departments have become increasingly reliant on external counsel (lawyers, adjusters, accountants) who are simply not as brand-aware as in-house teams. Sometimes this can add unnecessary tension or prolong the process. Retaining more of the decision-making within the organisation and allowing claims teams themselves to  drive matters to conclusion would  improve the experience for all parties. Another area for improvement is investment in building relationships early on. Relationships need to be formed before a loss event, not after it.

 

WILLEM VAN WYK
CHIEF EXECUTIVE OFFICER
ALLIANZ GLOBAL CORPORATE & SPECIALTY PACIFIC

What is the biggest challenge facing corporate risk managers in Australia?
Risk managers have an incredibly important role to play in helping organisations become more resilient. Unfortunately, some companies don’t recognise the true value that enterprise risk management can bring. One way risk managers can demonstrate their value is in the area of cyber risk. This is a huge challenge for companies today, but also  an opportunity for risk managers to tangibly demonstrate their relevance.

How can the insurance industry help corporates manage the new risk paradigm?
The insurance industry is  often criticised for being slow when it comes to innovation, but this is starting to change. From using artificial intelligence to predict and price risks, to assessing disaster zones with drones and robotics, there are many ways that we’re using new technology to help companies manage their evolving risk profile.

D&O has already hardened and will continue to do so as a result of the sharp risk in securities class actions

Despite cyber incidents being considered the number-one emerging risk for the long-term future, many companies are failing to measure and mitigate this risk. To address that challenge, Allianz has partnered with a start-up platform that can measure the accumulation of cyber risk and quantify its potential financial impact on a company.

What is the insurance outlook for the next 12 months? There are a few trends that we’re seeing. One is in directors’ and officers’ (D&O) liability insurance, which has already hardened this year and we believe it will continue to do so. This is a direct result of the sharp rise in securities class action cases in Australia, which means buyers of D&O should expect their policy wordings to contract and premiums to rise. Some other lines of insurance also appear to have reached the bottom of the cycle, with property being a key case in point.

 

NOEL CONDON
CHIEF EXECUTIVE
AIG AUSTRALIA LIMITED

What is the biggest challenge facing corporate risk managers in Australia?
Not being surprised by anything, which involves contemplating and anticipating issues before they arise, along with making decisions on mitigation.

The risk challenges may be changing, but these fundamental strategies still apply

How can the insurance industry help corporates manage the changing risk landscape?
We can help with risk identification, scoping and modelling exposures, scenario-testing, working on mitigation and building control mechanisms to provide balance sheet protection. The risk challenges may be changing, but these fundamental strategies still apply.

How can/will innovation in the insurance industry help companies better manage risk in the future?
Partnering with firms and individuals with specialist knowledge is one way. An example of this is our pilot with Standard Chartered and IBM, which uses Blockchain technology to issue multinational policies. Likewise, analytics helps us predict areas of risk, improve safety and ultimately reduce the cost of that risk. Machine learning is one area in which we are investing that can help with the early identification of risks, reducing incident response and claim payment times.

What is the insurance outlook for the next 12 months?
Mark Twain once said: “It’s dangerous to make forecasts, especially about the future.” In Australia, we may see some stabilisation in market conditions in particular classes. I also expect we’ll continue to see some dislocation, and some traditional firms changing focus as they seek improved margins.

How can the insurance industry improve the claims process?
Conducting actual test runs and workshopping real-life scenarios has proven to be valuable in fine-tuning our claims process. It allows all the main protagonists to come together before a claim occurs, and leads to greater collaboration and transparency.

 

RAJ NANRA
CHIEF EXECUTIVE, GENERAL INSURANCE, AUSTRALIA AND NEW ZEALAND
ZURICH

What is the biggest challenge facing corporate risk managers in Australia?
In the risk space, we’re focused on challenges we might not have seen before, intangible risks and a palette of new emerging risks. These include cyber and disruptive technologies, which in turn bring their own challenges, for instance the Internet of Things (IoT) and the interconnectivity of devices. While they bring significant benefits, there are also potential negative impacts we may not have considered.

The risk landscape is changing rapidly with companies facing a range of intangible risks. How can the insurance industry help corporates manage this new risk paradigm?
With new risks, the role of the traditional insurer must change. We need to challenge the conventional way in which policies operate, evolve and provide risk solution services to small and large corporates. Our role continues to change. We need to work with our customers more closely and assist them in evaluating and managing their risks. Education is key.

How can/will innovation in the insurance industry help companies better manage risk in the future?
Innovation can be looked at from the micro and at the macro level. For us, micro innovation centres on the insurer positioning itself as the centre for excellence for our customers and providing tools and insights to customers to self-evaluate and engage with their insurance provider. Macro is more relevant for larger corporates and this includes sophisticated tools and platforms to visualise and track risks including supply chain, products and distribution channels.

What is the insurance outlook for the next 12 months?
Specifically relating  to the risk landscape, the next 12-24 months should focus on laying the foundation for the next five to 10 years. Our future lies in big data, certainly as new risks continue to emerge and the risk panorama becomes increasingly complex. Investing now in big data and artificial intelligence is essential to remaining relevant to our customers.

 

CATHERINE CARLYON
HEAD OF ASIA-PACIFIC CLAIMS
XL CATLIN

What is the biggest challenge facing corporate risk managers in Australia??
The risk landscape is rapidly changing and so is regulation. The Australian government just passed new laws regarding data breaches and gave companies 12 months to comply. I’d say then that the biggest challenge for risk managers is staying on top of their companies’ ever-evolving risk profile and prioritising accordingly, sometimes with limited resources.

The risk landscape is changing rapidly with companies facing a range of intangible risks. How can the insurance industry help corporates manage this new risk paradigm?
Change is indeed occurring at a faster rate and the world is more connected than ever. New, less visible but sometimes more severe risks, can be the result of this changing landscape. Consider for example the widespread impact of some of the most recent global ransom and malware incidents. As insurers, we need to ensure our offering remains relevant and addresses the risks of today and tomorrow. We understand that and work to make sure we have the right solutions available – we have recently introduced a new cyber and data breach solution in Asia Pac. We also need to support our clients in understanding the significance and relevance of these risks to their organisations. Here communications is key: an open dialogue between underwriters, claim handlers, brokers and clients drives understanding which in turn strengthen risk mitigation  

How can the insurance industry improve the claims process?
The claims process is where an  insurance company really proves its value. Speed of decision-making and payment can be supported by process efficiencies and technology advancements. Transparency in the claims process can be enhanced through appropriate communications and potentially facilitated through technology. For instance, our claims platform allows our global programme clients to access up-to-date information about their claims from anywhere and to have an accurate overview of their claims  – and claims status – around the world.