European risk managers must focus on selling their risks to insurers and delivering the best information possible as the market heads towards a difficult year-end renewal season, advised  panellists who took part in a debate on the state of the corporate insurance market during Commercial Risk Europe’s annual conference with Belrim and Narim. The panel discussion took place only two days after Alexander Mahnke, president of the German risk and insurance management association GVNW, issued a stark warning to the industrial insurance market that poor communication and unacceptable delays in delivering quotes are making life very difficult for customers.

Mr Mahnke said the sector’s reputation is at stake as supposed long-term partners are pulling capacity and offering sometimes huge price increases with little or no warning. He said the risk and insurance management community accepts that insurers need to make profits, but said the currently clumsy way in which the market is carrying out its re-underwriting is not good enough.

Carl Leeman, vice-president of Belgian association Belrim and chief risk officer at international logistics firm Katoen Natie, agreed with Mr Mahnke. He said Belgian risk managers have also reported unacceptable behavior from their carriers as they reel from the impact of Covid-19. Mr Leeman stressed that there is no excuse for poor communication and knee-jerk reactions from insurers that can leave their long-term customers in a very difficult position and scrambling for adequate capacity at the last minute. He said insurers need to get their act together. “On renewals, many buyers aren’t pleased with what is going on. They are going very slowly, there is more and more communication with headquarters, there are bottlenecks being created and this means everything takes much more time than it should,” said Mr Leeman at the event, which was partnered by AIG, Chubb, CMS, Howden, Sompo International and Swiss Re Corporate Solutions.

The big question is: what should risk and insurance managers be doing right now to make sure they are not left high and dry at year-end? Mr Leeman advised fellow risk managers to proactively sell their risks to the market and make sure they deliver the right information to help with underwriting decisions. He also said risk mangers ought to explore options with local carriers, which are often not as preoccupied and impacted by the global trends that are challenging international insurers right now. “Buying is selling. You should sell your risk to the insurer, making clear what your risks are. Put yourselves in the shoes of the insurer and what they really want to know. You must be open and clear so there aren’t any surprises for either party,” said Belrim’s vice-president.

“Secondly, I think there is a big opportunity for smaller and local insurers that don’t carry the big losses of those covering big nat cats and liability claims in the US. Most of those big insurers are also involved in D&O claims. I have a solution already with a smaller insurer in my renewal that doesn’t have to bury those heavy claims. This obviously only works for local risks and not those in the US or other sensitive locations,” added Mr Leeman. The risk manager said partnerships between customer and carrier need to be worked on carefully. He noted that relationships are currently strained, but does not believe this will lead to a long-term breakup. “The situation between insurers and their clients is a bit like marriage. Sometimes you have disputes, but at the end of the day you have to continue living together and move on. So, we are in a dispute but it won’t be a divorce,” he said.

Herman Kerremans, chief executive officer of Howden Belgium, the recently launched Benelux arm of the fast-growing London-based broking group, also advised risk managers to begin renewals as early as possible. He said it is vital that the right information is delivered to help negotiations, especially with more complex risks and global programmes. “A sloppy file will not help you… selling your risk is key. This is another reason why you must start renewals early,” said Mr Kerremans. “Some underwriters are asking questions that are not understood or considered relevant for the renewal. So my advice is to keep an open communication and negotiate what information is really needed and what can be provided later on in the process, so you can speed up the renewal process,” added the experienced broker.

By Adrian Ladbury & Ben Norris on October 30, 2020