Amrae: Why captives will continue to offer buyers an alternative

Risks have never been as interconnected and changing as they are today. In this context, what development do you see in commercial insurance?

Companies are facing complex emerging risks that are evolving rapidly. Take the risks associated with new technologies, such as autonomous vehicles, drones, AI or 5G. While these developments bring about a level of social progress, they also create new risks or heighten risks in some areas.

Cyber risks, for instance, are still relatively new, evolving rapidly and impacting clients’ risk landscape. These risks are also evolving in what is currently a rather depressed market, with only a very few players and capacity that fluctuates.

While the market’s expertise and understanding of cyber is increasing, there is still a lot to do to further educate risk professionals and develop structured and sustainable solutions.

Climate risks are another area where the insurance sector needs to commit, collectively. As AXA XL’s Country Leader for France, I feel proud to belong to a company that has long been involved in the fight against climate change. Along with our broking partners and our clients, we need to develop long term solutions to tackle these risks holistically, and to focus on three key pillars: prevention, data, and risk financing.

In this current context, we have seen increased interest in alternative risk transfer solutions, including the use of captives. Long considered a reliable risk transfer tool, captives have been in the spotlight these last two years and have become a hot topic in P&C insurance.

Since 2020, our teams have seen an increase in cessions to captives. Many clients have sought our services to both retain higher limits for existing lines of business in their captive and to place new lines of business.

Traditional insurance remains essential for risk managers, but there is no doubt that self-insurance, structured reinsurance solutions and captives offer a flexible and effective alternative that is relevant to many of our clients.

Hard markets can impact the insurer-brokers-risk manager dynamic. Added to that social distancing has no doubt affected relationships. Is commercial insurance still a people business?

We must look beyond the current period and approach the topic with optimism. We saw last year somewhat of a return to normality and our relationships with our partners were restored in many ways.

From prevention to claims management, we were able to work, in a hybrid environment, with our clients and brokers, and to provide them with relevant solutions, which we can be proud of.

Being a partner to our clients means that we listen to each other, communicate when issues arise, understand, and accept each other’s perspective.

We know that periods of rate adjustment bring instability and uncertainty, but our clients and brokers know that they can rely on our commitment to partner and nurture relationships based on trust and dialogue.

I have always advocated for risk managers, brokers, and insurers to work hand in hand to collectively improve their understanding of risks.

“Alone we go faster, together we go further”, the saying may sound trivial, but I genuinely believe it is the key to developing and co-creating solutions with our partners, that align and reflect an appropriate match between risks and cover, both in terms of price and terms and conditions.

This is more than wishful thinking; it is a common theme for our industry.

What opportunities do you see over the coming months?

The last two years have highlighted the importance of being prepared for major risks and being agile. The future is not certain… what is certain, however, is that the role of insurance in this period of uncertainty has perhaps never been so relevant.

In addition to supporting our clients in traditional lines, we are going to further strengthen our service for our clients, which is the foundation for our market positioning: claims, risk consulting, captives, and global programs, for which we have one of the most extensive networks in the market.

We would also like to further support our clients with managing financial risks, such as political risk for domestic companies operating globally and find ways to incorporate their environmental, social and governance (ESG) practices into our underwriting of their risks.

What do you expect from this year’s Amrae conference?

The “Rencontres de l’AMRAE” is a key event in our market. It provides an opportunity to meet with our clients and brokers, to deepen our discussions on the issues that are of concern to them, and to reflect together on the development of solutions that align with their needs.

As a long-standing partner of the conference, we will of course be present in Deauville next week and, as we look forward to brighter days, we hope that the event will take place in the best possible conditions for all participants.

Julien Guénot is country leader for AXA XL in France.