Do you speak the right language? How to move insurance up the board agenda.

How do you get the board to take a serious interest in insurance? How can Airmic members persuade senior colleagues that price is not everything when it comes to cover? These were the main points of discussion at a lively seminar held recently at the Willis Building.

In what was to become a recurring theme of the event, panellist and PwC partner Alpesh Shah emphasised the importance of the language used to engage the board. "It's all about moving the conversation from premium to value," he said, pointing out that the size of a large claim could be equivalent to a year's dividend. This kind of point made "the insurance debate a whole lot more interesting." 

“It’s all about moving the conversation from premium to value” – Alpesh Shah

He added that, when it came to insurance, boards still tended to focus on how much they could afford rather than how much they actually needed.

"Under-insurance is a fact of life," agreed fellow-panellist, Ailsa King, Head of GB Client and Business Development at Willis Towers Watson. "It's our collective job, where possible, to transfer the risk to insurance."

Understanding the risks was key, she said, and she recommended the models used by insurers as "so incredibly helpful in understanding those risks."

"Models incredibly helpful in understanding risk" - Ailsa King

Phil Sharpe, Chief Operating Officer P&C at Chubb UK, admitted that it was difficult to raise the profile of something like insurance where you cannot show what it looks like. He described a three-stage process. First, identification of assets, which increasingly meant intangible assets such as brand reputation and data. Second, identifying threats to those assets - often reflecting new global issues such as terrorism, cyber and climate change. Finally, mitigation - looking at what happens before it happens.

He expressed frustration at the way some companies haggle over small sums of money when buying insurance, sometimes as little as £5,000, whilst losing sight of the bigger issues involved.

"Be smart, talk their [board members'] language, use models wisely," advised the last of the four panellists, Airmic technical director Julia Graham.

Julia Graham – talk the board’s language.

Getting the attention of directors was vital, yet their time is limited and they are natural optimists, she said. "Do you know what your company's strategic plans are?" she asked, suggesting that insurance programmes should be aligned with overall corporate strategy. "Risk has never had a higher profile with boards, don't let insurance become the poor relation."

Phil Sharpe – intangible risk products available

In the audience question-and-answer session that followed there was a lively discussion about intangible risks. Phil Sharpe said there was a wide range of products available - at a price. "Carriers do put the quotes out there, but are they taken up?" he asked. An audience member said that cyber and other intangible risks had the potential to consume 25% of the insurance budget, which led to some "very difficult" conversations with the board. "Some of the risks are more insurable than the board may think," added Julia Graham.

Another in the audience pointed out that limited resources and time limited what could be achieved. Ailsa King agreed, saying that exercises such as scenario planning were very time-consuming when done properly. She urged better use of data analytics and modelling.