In a 25-minute conversation Melanie (pictured) and Tracey debate the future of insurance beyond the hard market, the increasing role for captives and what the drive towards improved environmental, social, and corporate governance (ESG) performance will ultimately mean in the context of insurance procurement and risk financing.
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“It's absolutely clear that the market was heavily under-priced for the last two decades. And I don't think any of us think that we are going to return to those conditions,” said Tracey. “So as we sort of get used to the new normal, I think we need to go back to looking at some of the areas we were looking at prior to this whole market hardening in terms of actually the use of the coverage for the risks that our organisations face today.
“And if you overlay our insurance cover against our risk register, there are huge gaps in terms of what is uninsured. Closing some of those gaps is going to be really interesting for us and useful.”
Tracey added that the annual insurance cycle also needs to be addressed to remove inefficiencies that have become ingrained within risk financing.
“It just feels as though we are working in a very, both ourselves and the insurers, in quite an inefficient way and anything we can do to sort of cut down the elements of that cycle, or even move out of that cycle into a longer cycle with some breaks pre-agreed in the middle would be very useful.”
On the topic of inefficiencies and digital transformation, Melanie was in agreement and said it had been a priority since Andreas Berger was appointed CEO in 2019.
“It looks like the pandemic and the hardening of the market in various forms is going to continue into the next year and this has created a shock to the system for corporates,” she said.
“So another area of focus is around digital transformation that's taking place in the insurance industry. This means we've been quite busy trying to leverage data, technology and analytics in a way that we can provide better solutions for our clients.
“In the context of that changing landscape, I think we need to partner more and more with our clients to find additional solutions and services that continue to address inefficiencies in the insurance value chain.”