Risk management in theory and practice, including evolving risk strategies, risk financing, the risk management profession, risk analytics and core property/casualty coverage issues.
Developments and trends affecting buyers of specialty insurance lines, including D&O, E&O, employment practices liability, cyber risk, marine and transportation, and surplus lines.
News and analysis about the legislative, legal and insurance market issues that affect workers compensation managers, as well as strategies for reducing comp claims and costs, promoting workplace safety and returning injured employees to work.
Helping executives at midsize firms address people risks, such as benefits, workers comp and professional liability; property and liability risks, including insurance and loss control; and operational growth risks such as M&A and product development.
Covering the operational and strategic concerns of brokers, insurers and reinsurers, including legislative and regulatory developments, business challenges, market conditions and competitive intelligence.
Legislative and regulatory compliance, plan design, financing and strategy issues related to managing employee benefit plans, primarily health care and retirement benefits.
Insurers' service levels have worsened during the past year, with a significant number of risk managers surveyed by Business Insurance citing innovation, flexibility and willingness to pay claims as areas of poor performance.
Overall, 88% of risk managers at Europe's largest 100 companies surveyed by Business Insurance said insurers' service levels had not improved during the past year. Fifty-nine percent said service levels stayed the same, 29% said they had deteriorated, and only 12% said service levels had improved.
Insurers' performance in this year's survey was worse than that identified by risk managers in last year's survey. In 2008, just 11% of participating risk managers said insurers' service had worsened, 62% said it had stayed the same, and 27% said it had improved.
While most respondents to this year's survey said service levels were the same, many expressed discontent with certain areas. One Germany-based risk manager said insurers' service was bad on the whole, so even where service stayed the same, it was bad, he said.
The area where insurers performed worst in this year's survey was flexibility, in which 43% of those surveyed said insurers were less flexible than the previous year and only 14% noted an improvement in this area.
One risk manager who saw no improvement in insurers' flexibility said, "They like to talk about it, but I do not see a big difference." Another risk manager said some insurers were proving to be less flexible than previously.
Insurers' innovation also was an area that suffered during the past year. Some 36% of respondents this year said there was less innovation among insurers, with just 4% saying they had noticed an improvement.
The reversal of insurers' appetite for innovation is likely to reflect the painful experience of banks and some insurers with innovative financial products, such as the securitization of credit risk, risk managers said.
"All innovation has gone from the market because it has all become toxic, and the insurers are ready to dive back into the box," said a U.K. insurance buyer. "They see an opportunity because rates are hardening, capital is scarce, and reinsurance prices are up, so innovation is worse."
One risk manager at a Spain-based company said innovation had suffered from insurers' drive to ensure greater contract certainty after coverage disputes arising from the Sept. 11, 2001, U.S. terrorist attacks. "Innovation has been worse since 2001 as the market has sought standardization of insurance contracts," he said.
Several risk managers said the insurance sector is not an innovative industry. "There is never any innovation in this industry, so it cannot get worse," one risk manager said.
Insurers' willingness to pay also was an area that drew risk manager discontent. While 60% of risk managers said insurers' willingness to pay claims was the same as last year, 29% said it was worse, and only 11% said it had improved.
"In my view, if we have a loss now, it will be more complicated than a year ago," said a risk manager at a Spain-based multinational company. "They will want to appoint adjusters and take other actions to slow the payment of claims. All insurers will want to delay payments by a few months to help their cash flow," he said.
Another risk manager with a Spain-based company said insurers in the region have shown an increased interest in recent years in negotiating claims. "In my opinion, insurers now consider whether a claim is covered or not. And then when they have determined that the coverage is not complete, they then have to agree to the level of indemnity. In the past, the claim was covered and you just had to discuss the economic value of the cover."
Deterioration in claims service also is linked to troubles at American International Group Inc., a major provider of global programs and fronting services, said a London-based risk manager with a major European multinational. "The problem is that AIG has taken its eye off the ball from September onwards and so service levels have suffered," he said.
"Staff have been lost and this is an increased risk to us because of the scale of our global program. We are taking all the risk and they are doing the fronting. And if we want a claim paid, usually they would say, ‘Fine,' but now they are worried about the regulators and the like, so they are less flexible."
Of the risk managers that said insurers' willingness to pay claims had improved, one Germany-based buyer said AIG had been "exceptionally good" at adjusting claims. "AIG has improved tremendously and maybe done the industry a favor because it has shown how much benefit can be drawn from really focusing on what the customer wants and needs. I have not seen claims delayed and…in some respects I think everyone will realize that quick payment of claims is actually cheaper for everyone."
Perhaps reflecting upward movement in premium rates in some lines, price also was an area where risk managers expressed discontent in the 2009 survey. Twenty-one percent of respondents reported pricing was worse but an equal percentage said it had improved; 58% said it was unchanged.
Risk managers surveyed by Business Insurance said insurers' speed of response was largely the same as in the past, with just 11% saying it had improved and 18% saying it had slowed compared with 2008.
One Germany-based risk manager said he experienced improvements in insurer speed of response because he had pressured insurers to do so.
"We put pressure on people and if they do not perform, we go elsewhere," he said. "I have proven that we consistently stick with our partners because they do react when pressure is applied. One of the key things in terms of service is to have partnerships with people, and not so much with companies. I cannot influence companies, but I can influence people."
But several risk managers were not happy with insurers' speed of response.
"The market has never been able to respond quickly," said a risk manager with a large U.K. company. "The whole industry is built around deadlines and there is limited access to the real decision-makers and we are kept away from them as much as possible. In some respects, it becomes a blinking competition up to the wire: You state your position and then wait to see who blinks first."
Many risk managers say insurance brokers' efforts to improve service are moving in the right direction but still have a long way to go.
More risk managers at Europe's 100 largest companies surveyed by Business Insurance said they experienced an improvement in their brokers' overall standard of service than those who said it deteriorated.
During the past year, brokerage services improved for 29% of respondents to this year's survey. For 58%, they stayed the same; for just 13%, service deteriorated. Service levels were down slightly compared with last year's survey in which 36% of risk managers said service levels improved, 61% said they stayed the same and 3% said they had deteriorated.
Large brokerage houses in particular have had a tough time since they settled with then-New York Attorney General Eliot Spitzer and agreed to cease accepting contingent commissions in 2004. The resulting drive for income and increased competition has helped improve service levels, some risk managers say.
"There have been quite a few changes in the broking world recently," said an insurance buyer with a U.K. company. "There was a lot of movement of teams and the brokers have been challenged to achieve their income levels, which in a way has forced them to improve their service."
Brokers' speed of response and flexibility improved as a result, the risk manager noted.
Some 36% of risk managers said brokers' flexibility improved during the past year, while only 7% said brokers were less flexible. Speed of response was less clear-cut, with 21% saying service had improved and the same percentage saying it had slowed.
"Speed of service has improved," said a risk manager with a U.K.-based company. "Given all the changes in the broking market, this had to happen."
But while brokers have shown improvements in areas such as speed of response and flexibility, many risk managers were less than content when it comes to transparency of commissions and fees.
"Transparency is the same, and that is bad," said a risk manager with a leading France-based company. "I cannot see how brokers will adapt the business model. They charge a huge amount of fees for nothing. And the problem with brokers today is that I do not see the value. When I see that they want to charge an extra 2.5% commission, I do not see where the value has been added," he said.
Several risk managers acknowledged that brokers had taken steps to improve transparency, but they also remained cautious.
"Transparency has improved, but brokers had no choice," said a risk manager with a German company. "You have to ask the question, ‘Is this new transparency here to stay?' Given the slightest chance to retreat, I am sure they would."
A risk manager with a Spain-based company also said transparency had improved. "They are doing a little better than in the past, but there are a lot of steps pending. There is pressure from the regulators to take these steps, but not as much pressure as is needed," he said.
Reflecting the overall levels of service satisfaction, 32% of respondents felt they were getting better value for their money, while just 14% said they received worse value for the money spent than in the past.
Value received for money spent has improved because brokers are working harder for the same fee, a risk manager with a Spanish company said. "I think we get a better deal from our brokers overall," said another risk manager.
"Value for money has improved and we have even obtained reduced fees from our brokers in some cases," a risk manager at a Germany-based company said. "This was achieved through pure negotiation rather than a reduction in service."
But many risk managers remain dissatisfied with brokers' value for the money they receive. "Value for money is worse. You receive less and less and they expect more fees all the time," said a risk manager at a large French company.
"The brokers are trying to generate more revenue from fees, but they are struggling and it is not a convincing story for me," an insurance buyer with a Germany-based company said. "The large brokers have lessons to learn from the boutiques, because it all comes down to the team that is covering your account. In a boutique, they have three to four accounts and are told to focus upon servicing them," he said.
"The key for the brokers is that they need to know how to manage an account and hold onto the best people," he said.
Q: Which insurance company and broker do you believe offers the best value for money?
Asked which insurer offers the best value for the money spent with the broker, risk managers at Europe's largest 100 companies drew attention to a wide range of companies, although the response rate was smaller than other sections of the survey.
Insurers noted by risk managers included ACE Ltd.; Allianz S.E.; American International Group Inc.; AXA S.A.; Chubb Group of Insurance Cos.; Factory Mutual Insurance Co., which does business as FM Global; Gjensidige Forsikring B.A.; HDI-Gerling, Lloyd's of London; MAPFRE S.A.; Mitsui Sumitomo Insurance Co. Ltd.; Munich Reinsurance Co.; QBE Insurance Group Ltd.; Swiss Reinsurance Co.; TrygVesta Forsikring A.S.; and Zurich Financial Services Group.
Allianz and AXA were cited most often as offering the best value, followed closely by FM Global, Munich Re and Zurich Financial Services.
"For us, it is AXA which makes a difference in terms of flexibility and the variety of additional services they can offer to a corporate client," said one risk manager.
Buyers most often cited Marsh Inc. and Aon Corp. when asked which broker represents the best value. "Aon and Marsh, the others are far below," said a risk manager for a German company.
Buyers also cited Howden Insurance Brokers Ltd. and Assurex Global as providing the best value for the money risk managers spend.
Advertisement
Advertisement
Buyers fault insurers on levels of service
Insurers' service levels have worsened during the past year, with a significant number of risk managers surveyed by Business Insurance citing innovation, flexibility and willingness to pay claims as areas of poor performance.
Overall, 88% of risk managers at Europe's largest 100 companies surveyed by Business Insurance said insurers' service levels had not improved during the past year. Fifty-nine percent said service levels stayed the same, 29% said they had deteriorated, and only 12% said service levels had improved.
Insurers' performance in this year's survey was worse than that identified by risk managers in last year's survey. In 2008, just 11% of participating risk managers said insurers' service had worsened, 62% said it had stayed the same, and 27% said it had improved.
While most respondents to this year's survey said service levels were the same, many expressed discontent with certain areas. One Germany-based risk manager said insurers' service was bad on the whole, so even where service stayed the same, it was bad, he said.
The area where insurers performed worst in this year's survey was flexibility, in which 43% of those surveyed said insurers were less flexible than the previous year and only 14% noted an improvement in this area.
One risk manager who saw no improvement in insurers' flexibility said, "They like to talk about it, but I do not see a big difference." Another risk manager said some insurers were proving to be less flexible than previously.
Insurers' innovation also was an area that suffered during the past year. Some 36% of respondents this year said there was less innovation among insurers, with just 4% saying they had noticed an improvement.
The reversal of insurers' appetite for innovation is likely to reflect the painful experience of banks and some insurers with innovative financial products, such as the securitization of credit risk, risk managers said.
"All innovation has gone from the market because it has all become toxic, and the insurers are ready to dive back into the box," said a U.K. insurance buyer. "They see an opportunity because rates are hardening, capital is scarce, and reinsurance prices are up, so innovation is worse."
One risk manager at a Spain-based company said innovation had suffered from insurers' drive to ensure greater contract certainty after coverage disputes arising from the Sept. 11, 2001, U.S. terrorist attacks. "Innovation has been worse since 2001 as the market has sought standardization of insurance contracts," he said.
Several risk managers said the insurance sector is not an innovative industry. "There is never any innovation in this industry, so it cannot get worse," one risk manager said.
Insurers' willingness to pay also was an area that drew risk manager discontent. While 60% of risk managers said insurers' willingness to pay claims was the same as last year, 29% said it was worse, and only 11% said it had improved.
"In my view, if we have a loss now, it will be more complicated than a year ago," said a risk manager at a Spain-based multinational company. "They will want to appoint adjusters and take other actions to slow the payment of claims. All insurers will want to delay payments by a few months to help their cash flow," he said.
Another risk manager with a Spain-based company said insurers in the region have shown an increased interest in recent years in negotiating claims. "In my opinion, insurers now consider whether a claim is covered or not. And then when they have determined that the coverage is not complete, they then have to agree to the level of indemnity. In the past, the claim was covered and you just had to discuss the economic value of the cover."
Deterioration in claims service also is linked to troubles at American International Group Inc., a major provider of global programs and fronting services, said a London-based risk manager with a major European multinational. "The problem is that AIG has taken its eye off the ball from September onwards and so service levels have suffered," he said.
"Staff have been lost and this is an increased risk to us because of the scale of our global program. We are taking all the risk and they are doing the fronting. And if we want a claim paid, usually they would say, ‘Fine,' but now they are worried about the regulators and the like, so they are less flexible."
Of the risk managers that said insurers' willingness to pay claims had improved, one Germany-based buyer said AIG had been "exceptionally good" at adjusting claims. "AIG has improved tremendously and maybe done the industry a favor because it has shown how much benefit can be drawn from really focusing on what the customer wants and needs. I have not seen claims delayed and…in some respects I think everyone will realize that quick payment of claims is actually cheaper for everyone."
Perhaps reflecting upward movement in premium rates in some lines, price also was an area where risk managers expressed discontent in the 2009 survey. Twenty-one percent of respondents reported pricing was worse but an equal percentage said it had improved; 58% said it was unchanged.
Risk managers surveyed by Business Insurance said insurers' speed of response was largely the same as in the past, with just 11% saying it had improved and 18% saying it had slowed compared with 2008.
One Germany-based risk manager said he experienced improvements in insurer speed of response because he had pressured insurers to do so.
"We put pressure on people and if they do not perform, we go elsewhere," he said. "I have proven that we consistently stick with our partners because they do react when pressure is applied. One of the key things in terms of service is to have partnerships with people, and not so much with companies. I cannot influence companies, but I can influence people."
But several risk managers were not happy with insurers' speed of response.
"The market has never been able to respond quickly," said a risk manager with a large U.K. company. "The whole industry is built around deadlines and there is limited access to the real decision-makers and we are kept away from them as much as possible. In some respects, it becomes a blinking competition up to the wire: You state your position and then wait to see who blinks first."
Many risk managers say insurance brokers' efforts to improve service are moving in the right direction but still have a long way to go.
More risk managers at Europe's 100 largest companies surveyed by Business Insurance said they experienced an improvement in their brokers' overall standard of service than those who said it deteriorated.
During the past year, brokerage services improved for 29% of respondents to this year's survey. For 58%, they stayed the same; for just 13%, service deteriorated. Service levels were down slightly compared with last year's survey in which 36% of risk managers said service levels improved, 61% said they stayed the same and 3% said they had deteriorated.
Large brokerage houses in particular have had a tough time since they settled with then-New York Attorney General Eliot Spitzer and agreed to cease accepting contingent commissions in 2004. The resulting drive for income and increased competition has helped improve service levels, some risk managers say.
"There have been quite a few changes in the broking world recently," said an insurance buyer with a U.K. company. "There was a lot of movement of teams and the brokers have been challenged to achieve their income levels, which in a way has forced them to improve their service."
Brokers' speed of response and flexibility improved as a result, the risk manager noted.
Some 36% of risk managers said brokers' flexibility improved during the past year, while only 7% said brokers were less flexible. Speed of response was less clear-cut, with 21% saying service had improved and the same percentage saying it had slowed.
"Speed of service has improved," said a risk manager with a U.K.-based company. "Given all the changes in the broking market, this had to happen."
But while brokers have shown improvements in areas such as speed of response and flexibility, many risk managers were less than content when it comes to transparency of commissions and fees.
"Transparency is the same, and that is bad," said a risk manager with a leading France-based company. "I cannot see how brokers will adapt the business model. They charge a huge amount of fees for nothing. And the problem with brokers today is that I do not see the value. When I see that they want to charge an extra 2.5% commission, I do not see where the value has been added," he said.
Several risk managers acknowledged that brokers had taken steps to improve transparency, but they also remained cautious.
"Transparency has improved, but brokers had no choice," said a risk manager with a German company. "You have to ask the question, ‘Is this new transparency here to stay?' Given the slightest chance to retreat, I am sure they would."
A risk manager with a Spain-based company also said transparency had improved. "They are doing a little better than in the past, but there are a lot of steps pending. There is pressure from the regulators to take these steps, but not as much pressure as is needed," he said.
Reflecting the overall levels of service satisfaction, 32% of respondents felt they were getting better value for their money, while just 14% said they received worse value for the money spent than in the past.
Value received for money spent has improved because brokers are working harder for the same fee, a risk manager with a Spanish company said. "I think we get a better deal from our brokers overall," said another risk manager.
"Value for money has improved and we have even obtained reduced fees from our brokers in some cases," a risk manager at a Germany-based company said. "This was achieved through pure negotiation rather than a reduction in service."
But many risk managers remain dissatisfied with brokers' value for the money they receive. "Value for money is worse. You receive less and less and they expect more fees all the time," said a risk manager at a large French company.
"The brokers are trying to generate more revenue from fees, but they are struggling and it is not a convincing story for me," an insurance buyer with a Germany-based company said. "The large brokers have lessons to learn from the boutiques, because it all comes down to the team that is covering your account. In a boutique, they have three to four accounts and are told to focus upon servicing them," he said.
"The key for the brokers is that they need to know how to manage an account and hold onto the best people," he said.
Q: Which insurance company and broker do you believe offers the best value for money?
Asked which insurer offers the best value for the money spent with the broker, risk managers at Europe's largest 100 companies drew attention to a wide range of companies, although the response rate was smaller than other sections of the survey.
Insurers noted by risk managers included ACE Ltd.; Allianz S.E.; American International Group Inc.; AXA S.A.; Chubb Group of Insurance Cos.; Factory Mutual Insurance Co., which does business as FM Global; Gjensidige Forsikring B.A.; HDI-Gerling, Lloyd's of London; MAPFRE S.A.; Mitsui Sumitomo Insurance Co. Ltd.; Munich Reinsurance Co.; QBE Insurance Group Ltd.; Swiss Reinsurance Co.; TrygVesta Forsikring A.S.; and Zurich Financial Services Group.
Allianz and AXA were cited most often as offering the best value, followed closely by FM Global, Munich Re and Zurich Financial Services.
"For us, it is AXA which makes a difference in terms of flexibility and the variety of additional services they can offer to a corporate client," said one risk manager.
Buyers most often cited Marsh Inc. and Aon Corp. when asked which broker represents the best value. "Aon and Marsh, the others are far below," said a risk manager for a German company.
Buyers also cited Howden Insurance Brokers Ltd. and Assurex Global as providing the best value for the money risk managers spend.
