Amrae: Time for insurers to rebuild trust

French risk managers may not be meeting in Deauville this February, but Amrae is determined the spirit of the annual gathering should remain. It has hired television studios and gained the backing of its insurer and broker partners to ensure it can put on a show - which is free to all - and appeal to as wide an audience as possible. 

StrategicRISK caught up with Amrae president Oliver Wild on the eve of La Sagesse du Risque to find out more about the programme and key themes of the conference. Despite being backed by the insurance industry, Wild said there would be no shying away from discussing the challenges presented by the hardening insurance market.

“In 2019 we anticipated the market was hardening but I don’t think we thought it was going to be as brutal as it was,” says Wild, who is also risk, insurance and internal control coordination director at French utilities giant Veolia. “We’ve been very vocal and really had debates with the brokers and with the insurers.”

He is concerned that if immediate steps are not taken to rebuild trust and re-establish a dialogue, essential risk partnerships may be lost.

“We’re at risk of creating a real fracture between the insurance buyers and the insurance market. It wasn’t just a question of price. The element that hit hardest was the reduction in capacity or the very reduced risk appetite the insurers had. And it was very brutal without all that much dialogue in many cases.”

“We’ve had that discussion how potentially it was unfair with the reduced capacity and huge amount of exclusions,” he continues. “Now is the time to say, ’Okay lets prepare for 2021 and start working together now, and create that dialogue and rebuild that partnership learning from the last two years on how we can do it better.”

“Because if we don’t take the time to create that dialogue and partnership there is a serious risk where companies who can and have got captives, have taken on so much of the risk onto their balance sheets and the markets have been pushed higher and higher up in the insurance tower. So when the market is ready to come back the companies may just say, I’m quite comfortable managing my own risk and I’ll only come and see you for the very exceptional. Whereas in the past there was a real sharing of risk.”

“So a key message is how do we rebuild that trust and dialogue so we can get back into effective solutions and more importantly build new solutions.”

Wild says Amrae has made good progress in its discussions with the government looking at the potential for a public private solution for systemic, or exceptional, risks, not just pandemic. The need to develop innovative solutions will be discussed during a roundtable at the virtual event.

“Amrae has been very active in discussions with the government on creating new models, promoting captives in France and making sure that we have a solution that works for all companies, whatever their size, and that we’re better prepared for the next crisis.”

“The discussions have gone well with the government and they’ve understood we can’t deal with risks in silos. That we need to build a solution for companies for exceptional risks, whereby we give them flexibility to provision risks that are unknown. So that’s a big shift in the mindset and it will be interesting to see how that develops over the next few months.”

Building back better

A big focus of the event is on how to rebuild once the COVID-crisis has passed. While crisis management teams are still in the thick of dealing with the current day to day challenges, risk managers are also looking ahead.

“The challenges pre crisis have not gone away,” says Wild. “Major issues such as climate change and social unrest, that have been going on for quite a while before the COVID-crisis, those risks are almost exacerbated by a crisis like that and show the weakness of some of our models.”

The first plenary session on day one of the conference will therefore consider what new models will be needed to rebuild. “We need to make sure we don’t go back to December 2019 and make sure we rebuild the new economy and find new ways of working based on all the experience we have, and integrating the challenges that were there before the COVID-crisis,” explains Wild.

“It’s not a new topic but we believe resilience is not something you can do on your own - it’s a collective action - so it’s companies working with other companies, working at a regional or national level, and working with the public and private sector together so we can rebuild the economy.”

Environmental, social and governance (ESG) is emerging as a strong theme as companies seek to rebuild, he notes. Human capital “with a capital H” is another key theme, with the pandemic shining a light on organisations’ duty of care to their staff.

The conference will include a roundtable on, ‘Risks, climate and social responsibility,’ and plenary sessions on, ’The new HR and associated risks’, ‘Collective resilience’ and ‘Funding risk taking while strengthening collective resilience: Risk management, the matrix of responsible capitalism’.

“More and more companies are gearing towards being more responsible companies,” observes Wild. “If you manage your risks, you’re a more durable responsible company and today the discussion should be about finding a better balance between your financial and economic performance and social and societal aspects. It’s a shift really in the way we see capitalism.”