BIRMINGHAM, England — Current market conditions give risk managers a real opportunity to increase both their relevance to their organizations' boards and their influence within their organizations, insurer and broker CEOs said Tuesday at Airmic Ltd.'s annual conference.
Experts gathered for a panel debate at the risk management group's meeting in Birmingham, England, said that while the insurance market remains soft for many lines, risk managers need to ensure they have appropriate coverages and a relationship with their broker and underwriters that encourages innovation of products.
“There is clearly excess capacity” in the insurance market currently, but “risk is mutating very fast” at the same time, said Mike McGavick, CEO of Dublin-based XL Group P.L.C.
He said insurers need to ensure they are servicing their clients appropriately. There is an “opportunity for risk managers to really become the risk Sherpas, the risk guides,” for their companies, he said.
“You need to reassess what you get from your insurers and how you get it best,” he added.
While it is good for buyers when the market is soft and they can achieve favorable rates, risk managers should not take “personal credit for the soft market,” said Mark Weil, CEO for the U.K. and Ireland at Marsh L.L.P. in London.
During periods of soft rates, instead of just trying to lock in low prices, risk managers must address risk issues within their business to ensure they can maintain favorable rates and breadth of coverage when the market hardens, he noted.
Emerging risks require team approach
When it comes to newer risks and soft assets, such as cyber risk, risk managers, brokers and insurers all need to work together to try to understand the risk, said Mike Hammond, CEO of Lockton Cos. L.L.P.’s international operations in London.
“We are all, to an extent, clutching at straws” currently, he said.
“In the same way that the market is able, at least partially, to model natural catastrophe risk, we need to find a way to model soft asset risks,” he said.
Because some of the issues that insurance buyers are facing are so new, brokers, insurers and risk managers need to work together to try to build products and services, Mr. Hammond said.
“Collaboration is needed for progress in innovation,” said Philippe Rocard, CEO of Axa Corporate Solutions, a unit of Paris-based Axa S.A.