A new approach to commercial insurance?
Will commercial insurers morph into risk advisers and service providers who also offer cover? Is the old model where insurers rely almost exclusively on premiums for their income doomed? These were some of the issues debated at Zurich's Global Risk Management Summit, where Airmic CEO John Ludlow renewed his call for insurers to change their approach towards clients.
"If we work together, we can shape our future. If we don't shape it, someone will shape it for us," John Ludlow told the Zurich Global Risk Management Summit (GRMS) in Berlin.
The event developed a theme that is becoming familiar to readers of Airmic News - that the old transactional model of commercial insurance based around the annual renewal is out of date. For his part, Zurich's Commercial Insurance CEO James Shea indicated that they are already evolving and taking up the challenge.
Insurers need to sharpen their focus on innovation and work closely with risk managers and brokers to ensure customers' needs are met and the marketplace for coverage thrives, said Ludlow, adding that the insurance industry is lagging behind other industries when it comes to innovation.
He highlighted the renewal process as an area where change is needed. "We need to stop spending our time looking in the rear-view mirror," he said, and instead use renewal meetings to consider where companies would like to be in a year's time, their strategy for getting there and how to support them in achieving their goals.
Insurers should consider new ways in which they and their customers can profit from coverage arrangements, Ludlow suggested. By helping reduce risks and providing coverage at a reasonable price, there is potential on some lines for a model whereby "insurers take a percentage of performance improvements as a result of reductions to their customer's risk class instead of a standard premium."
In Zurich's case, according to Shea, they are already taking advantage of opportunities to serve customers better through technology by collaborating with tech companies that are providing new and disruptive offerings. Zurich's purchase of digital travel insurer Cover-More, which provides a range of innovative customer services with its coverage, is an example of how the company is addressing the growing demands of customers for new approaches delivered on their terms.
Shea emphasized that an insurer's role is to mitigate its customers' risks and in order to do that, services should be a core part of the proposition. An example is Zurich's risk engineering services. "It is not just about fees for us; it is about providing customers with expertise and experience that they can leverage in their businesses."
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