Developing solutions beyond risk transfer

Companies of all sizes are increasingly focusing on prevention, mitigation and resilience, as the impact of Covid-19, cyber risks and climate change highlight the uncertainties and the rapidly changing risk landscape they are facing.

There is enormous potential for insurers and brokers to help clients with education, risk identification, loss prevention and recovery measures. Insurers in particular have considerable experience, access to loss data and risk engineering as well as modelling expertise. Some, such as Zurich, have invested heavily in digital and existing capabilities such as risk engineering and in strategic agreements with specialist organizations to help customers identify, manage and monitor their risks.

And, in the current hard market, companies are looking for ways to differentiate themselves as well-managed risks in order to get favourable rates. They also are considering alternative solutions such as increased retentions and use of captives, which makes risk mitigation and prevention services even more important.

In our research, CEOs and CFOs told us that some of the services they buy are often about ticking boxes rather than helping them resolve issues. But for insurers it is about helping companies manage the risks of their core business and providing an early warning system along with timely practical help. Insurers are not only helping companies identify issues and arrange cover where possible, but are also fixing issues where insurance may not be the complete answer. We aim to spot the deficiencies in their armour and help strengthen their defences. Simply said, insurers have skin in the game!

Risk advisory services

Insurers offer a number of services beyond risk transfer. Leading ones often have large teams of risk engineers that have specialist insight into risk identification, assessment and mitigation, not just in property and business interruption, but also in liability, motor fleet, supply chain, cyber, as well as health and safety.

Organizations frequently suffer from a lack of relevant and reliable data, tools and insights to help mitigate their risks. Insurers have access to huge amounts of data that can provide genuine, valuable insights into the issues faced by customers, based on analyses and the use of digital tools. This enables prompt action and, most importantly, proactive measures to help customers mitigate a wide range of risks.

Global insurers are able to harness the data of tens of thousands of companies and, subject to GDPR, are increasingly able to use that data to come up with new services, solutions and tools. And if the data is leveraged properly, it can, along with the right digital capabilities, be used to provide up-to-the-minute insights and recommendations for customers.

Insurers can also leverage strategic agreements in areas where specialist firms have focused capabilities. Cyber is an example: an insurer’s experienced and qualified cyber risk engineer will provide a holistic view of our customers controls and their adequacy with respect to their exposure. From there, we can deliver additional services targeting specific risk areas and bring industry-leading partners to perform technical work.

Collaboration with brokers

By having their capital exposed to risk, insurers are looking to become trusted advisers and add greater value to the overall risk management of their customers. That means developing long-term relationships with companies and brokers that don’t depend on a yearly renewal or a slight change in the annual rate. Risk engineering, loss prevention and building resilience are all long-term strategies that require a true partnership approach. This partnership demands close collaboration between all involved – customer, broker and insurer, as well as co-insurers and reinsurers, contractors and consultants – to form an ‘ecosystem’ to provide complementary risk services to comprehensively meet the business needs of the insured customers.

One-stop shop

Insurers such as Zurich are providing their advisory services to customers with a much more centralised and coordinated approach. In our research with CEOs and CFOs, what came back again and again was that companies are increasingly taking a holistic look and a more c-suite-driven approach. Insurers are therefore looking closely at their capabilities and focusing on the areas of greatest concern for customers, in order to determine how they can provide services and expertise that will make a difference.

As a result, insurers are bringing their highly appreciated advisory services together into a single global unit, as we have at Zurich with the launch of Zurich Resilience Solutions. Previously, insurers’ capabilities and services have tended to be dispersed across the globe and in different business units, or worse, been used only for internal purposes. By bringing it all together, synergies are achieved and there is an ability to focus on and invest, for example, in the digital tools that support the advisory services. Resources can be pulled together centrally to build a quality proposition, a proper partnership and a scalable solution.

This is about moving beyond risk transfer, above and beyond insurance, creating a focused organization – a dedicated unit with one mandate: develop and offer service propositions in line with our customers’ needs to help them manage the risks of today and tomorrow.

Zurich has announced the launch of a new global unit, Zurich Resilience Solutions, to help companies with the mitigation and proactive prevention of risks.

Originally published on Commercial Risk Online on May 31 2021