Tailored insurance better value – Allied World

Understanding a risk manager’s business and developing tailored covers offers insurance clients better value than buying commoditised products that could fail to measure up. That was the message from Enrico Bertagna, head of European distribution at insurer Allied World.

“We want to spend time with risk managers, to get a closer understanding of them and of their business. We also have an appetite to write more corporate business in the UK and continental Europe,” Bertagna told StrategicRISK.

Bertagna lamented insufficient time spent discussing risk problems face to face between insurers and corporate clients. “I appreciate it is also role of brokers, but as insurers we have a duty to discuss critical issues with the clients and the brokers. That’s why FERMA is important to us – it’s the perfect platform to sit down and have those conversations,” he said.

He acknowledged the glut of capacity available to corporate buyers, but suggested that quick-fix covers at low price alone does not necessarily mean good value. “There is a tendency to rely on short term deals over price. That’s fine for insuring cars and households, but not good for commercial and corporate clients,” he said.

“They need a partner, not just an insurer. They need a professional at the beginning, during, after, and throughout the relationship. It’s not about signing a deal and disappearing for 12 months,” Bertagna continued.

Tailored covers can offer better value than commoditised purchases, he emphasised. “There is a tendency to commoditise insurance, but such an approach can be problematic for corporate clients. Each one of them has different features and different needs. The insurers that will struggle are those that don’t have specific know-how and expertise to deal with corporate clients,” said Bertagna.

“Cyber, supply chain, intangible risks – there are a lot of conversations going on within this space,” he continued. “Those are classes that are still relatively undeveloped for the industry. Not many buyers in Europe are prepared to invest what is necessary to buy those covers, and on underwriting side, they are still not very well modelled yet to priced effectively.”

Too many covers for intangible risks are also being packaged within larger commoditised placements, he suggested. Risk managers can be tempted to seek the cheapest basic covers with simple policy wordings – but which might let them down when they need them most. Tailored covers are particularly important for such intangible threats, Bertagna suggested.

“This applies particularly to the cyber insurance space. Companies have got into trouble by purchasing covers that do not work for them. For example, a claims event might not just be a pure breach of IT systems but also a cyber extortion, which is becoming perhaps the most important aspect of cyber exposure,” he said.

“There are plenty of solutions in the market. It’s not about pricing, or even about paying claims as fast as we can – building that relationship is more important from my perspective. We need to make sure our underwriters and risk engineers work with clients to build understanding,” Bertagna added.