Making the difference in the hard market

Risk managers faced with a challenging renewal season are counting on insurers to thoroughly understand their business and keep a clear and constant dialogue throughout the process, says Hayley Robinson, group chief underwriting officer at Zurich Insurance Group.

That lesson was reinforced during the COVID-19 pandemic, says Robinson, who took on her new role after serving as Zurich’s head of UK underwriting. Working closely with customers was particularly important at a time when face-to-face meetings were replaced with virtual connections and the risk landscape shifted as business operations adapted to new regulations and consumer habits, she adds.

“It is important that underwriters have a good understanding of a customer’s business, its risk, opportunities and challenges, in order to deliver the right solutions,” Robinson says. “What has been really important in the last year is to have a constant dialogue with customers and their brokers to understand how we could support them best.”

As the hard market has lingered, insurers and their customers have become more comfortable with dialogue that can sometimes be a bit difficult, Robinson notes.

“My sense is, the market has been hardening through at least two renewals,” she says. “Now that we are having similar conversations for the third time, it is getting easier, particularly the conversation about changes.”

Customers have come to understand what to expect at renewals, Robinson explains. However, there may still be times when frank conversations are called for, she adds.

“If terms and conditions, capacity deployment or price are changing, we owe it to our customer to be clear about those changes and give them plenty of time to review and discuss them,” she says.

Critical time for dialogue

After an active catastrophe year and challenges that are continuing among some liability lines, close dialogue with customers is essential, according to Robinson.

“You only have to look at 2021 – the Texas freeze, flash floods in Germany and other parts of Europe, hailstorms in Switzerland. It has been another year with plenty of cat events, so property remains one of those challenged areas of business. Underwriters need to be mindful of that and the potential further impact of climate change,” she says.

An emerging challenge is the way in which catastrophe events are evolving, Robinson notes. “Certain events were concentrated in one area, but we are seeing that they can happen in a broader geography now. That is a different risk from the past.”

Liability exposures bring their own set of concerns, she says.

“We still see challenges in the directors and officers liability market and there is still a shortage of capacity. Another area is cyber, where we have seen more ransomware attacks than in previous years. Prices for cyber cover are rising and capacity is not,” she notes.

Risk managers and insurers also need to factor in inflation, says Robinson. “We are continuing to see inflationary pressures,” she says, “from wages, increases in the cost of raw materials and pressure on the supply chains.

“What is important for risk managers, and for us, is to make sure that property values and insured business interruption sums as well as limits of indemnity are up to date to reflect the various inflationary pressures,” Robinson stressed. “We need to be having conversations with customers and their brokers to make sure that is happening and that they are adequately insured. Through these challenging times the long-term relationships and open conversations with our customers and brokers have proven to be very important.

Data and talent make a difference

To successfully write business in the hard market, Zurich looks to keep underwriting portfolios well-balanced and make the best use of technology to gain a broad understanding of the risks under consideration, according to Robinson.

Getting the most from data is particularly important, she emphasizes. “It helps with risk solutions and in conversations with customers,” she said. “It allows us to ask how we can support them in better management of exposures and improving risk mitigation.”

Along with effective data management, Zurich relies on its underwriters to help deliver sustainable results and meet customers’ needs, Robinson says. And, much attention is paid to training and recruiting the right people for the work, she added.

“It is all about enabling our people to make decisions at the front line,” Robinson continues. “And we need people who have the right capabilities - that is of paramount importance. We are asking them to take risk, so you want someone with good judgment.”

Zurich operates its own underwriting academy and managed the switch to virtual training last year as the COVID-19 pandemic took hold. Robinson says she is pleased at how the insurer has managed to maintain its training programme – and even provide more opportunity for learning via various virtual platforms – through the past year.

“We want to offer consistent training to enhance our underwriters’ skills and provide rewarding careers. We also have global tools to help our teams deliver consistency in our offerings to customers,” she says.

Zurich also operates peer reviews so that business decisions can be discussed and analysed to help individuals and teams improve. “Through the pandemic we lost those coffee machine moments and these virtual peer review conversations have helped to support our teams.”

Well-trained teams help maintain close relationships with customers during the renewal season and throughout the year, according to Robinson. And, she adds, regardless of market conditions, a deep understanding of customer needs, continuous dialogue and smart underwriting backed by accurate data go a long way in keeping those relationships strong.

Originally published on Commercial Risk on December 8 2021