Insurers must innovate to shape their future, Airmic CEO says

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, the head of the UK’s Association of Insurance and Risk Managers in Industry and Commerce (Airmic) contends.

John Ludlow, CEO of London-based Airmic, stressed at Zurich’s Global Risk Management Summit (GRMS) in Berlin that the insurance industry is lagging behind other industries when it comes to innovation and needs to step up the pace. “If we work together, we can shape our future. If we don’t shape it, someone will shape it for us,” he said.

Ludlow spoke during a discussion at the GRMS that included fellow panelist James Shea, Zurich’s CEO Commercial Insurance.

In Zurich’s case, the insurer is taking advantage of opportunities to serve customers better through technology by collaborating with tech companies that are providing new and disruptive offerings, Shea pointed out. 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.

Insurance and risk management will catch on with regard to innovation, Ludlow acknowledged. While there has been little recent evidence to show that the insurance industry is embracing innovation, this is not likely to be the case five years from now, he said.

Insurers need fresh approaches

Technology aside, 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,” he said.

Insurers, brokers and businesses need to stop looking backward, particularly when it comes to dwelling on what has happened since the last renewal, according to Ludlow. “We need to stop spending our time looking in the rearview 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.

Shea agreed that insurers do need a strong forward-looking approach while continuing to address any current customer concerns. “We need to make sure that when we look to the future, we don’t forget to fix some of the existing problems in the present,” he added.

Changing relationships

New technology also means new business relationships. With greater availability of data-sharing and connection between systems and platforms, there are opportunities to better adapt to the needs of customers.

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.”

Relationships among insurers, brokers and risk managers have evolved so that their representatives are seen as ambassadors, Ludlow noted. However, “relationships need to be built on business interactions and not just hospitality.”