Sara Mitchell, Division President, UK and Ireland Retail Business, Chubb
We’ve all heard the term “unprecedented times” used to describe the effects of the COVID-19 pandemic. And few would dispute otherwise. This applies not only to many aspects of our personal lives but also to the financial challenges that face virtually every company in the UK and beyond.
As insurers, we need to recognise that, in addition to concern about the health and safety of their employees, companies are typically prioritising one of two things – they are battling to stay in existence or attempting to capitalise to create shareholder value. Either way they are having to make some really tough decisions with regard to the size of their workforce, expenses and/or supply chain. As a result of this, every element of business costs are being scrutinised perhaps more than ever before - and that includes the purchase of insurance.
Generally, most of our clients, whether they be risk managers or procurement appreciate the value insurance brings but, at the same time, they know it is still a cost to their organisation. A purchase of a promise to pay.
Many of us will have seen over the past six to 12 months the market dynamics start to shift: rates firming in some areas, hardening in others such as financial lines and more latterly marine and in the property space. Not all the changes are linked to COVID-19 - the market was already moving in its current direction. The pandemic might not be the root cause but it is an accelerant as some carriers withdraw capacity and terms and conditions change. All of this has a direct effect on the cost to a client with upward pressure on their premium in affected classes.
Within this market context, larger clients are increasingly looking to insurers to support alternative structures to help manage their expenses. They want to see innovation in the way we look at things and how we might deploy our capacity in different ways without having a detrimental impact on protection. This might, for example, involve greater captive use, different deductible structures or it could be a minimum deposit process for premiums.
In light of changing demands, carriers need to be agile and forward thinking to look at restructuring programmes to cater for potential new exposures and have the flexibility to continue to innovate on an ongoing basis.
As an industry we have always had some of the tools to do this and we have so much data at our fingertips to help us make decisions, but we now need to bring them to the forefront. With the help of our broker partners we can then explain to clients how to structure a programme that works for them within any financial constraints they might have. It is our responsibility to understand the challenges that our customers have and to be able to work with them.
COVID-19 has had a profound impact on insurance cost, in an already fluid market. This will continue to compound the fundamentals of rate adequacy and driving a profitable return in our businesses – which leads me to believe we will continue to see challenges on the supply of insurance at a price and a deployment of capacity which is recognisable to previous years.
At Chubb, we remain committed to all the lines of business we traded in before the pandemic. We are still looking to deploy a significant amount of capacity for the right risk, with the right terms and conditions and the right risk prevention in place.
This is a market that Chubb can trade in and I am proud that we have always been consistent in terms of where we are willing to deploy capacity. However, we need to ensure a rate adequate price to insure the risk. Current market conditions require carriers to be innovative and to show leadership. From an underwriting perspective, it needs the skill and expertise of great people to understand the complexity of the questions being asked and to come up with a solution. We have those people at Chubb.
Regardless of the changing environment, Chubb is committed to the markets, brokers and clients we serve. Our underwriters are empowered to use the capacity of Chubb to create solutions for clients. We trade multiple lines of business all across the country and we are encouraging our underwriters to be bold – not only in capacity deployment but also in the solutions they put together. All with the ability to create complex solutions for clients wherever the underwriters or the clients may be based.
There is no perfect answer for some of the challenges we are all facing in a dynamic market such as this and there are going to be times when we may not have the ideal solution for our clients. However, one thing I feel very confident about with our people is that we’ll always give it 100% to try…
Sara Mitchell is Division President, UK and Ireland Retail Business, Chubb