ferma reveals plans to tackle guide launched emerging ... · ferma’s plan is to discuss these key...
TRANSCRIPT
By Ben [email protected]
[brussels]—Ferma revealed yesterday that it plans to arrange specific events and sessions on intangible and more difficult to manage risks to help members feel more confident in their ability to mitigate these new and emerging threats.
The focus on areas such as cyber, supply chain and environmental exposures is in part prompted by the results of the federation’s 2014 benchmark survey that shows risk managers are unsatisfied with their current level of mitigation on many of the leading risks that keep their CeOs awake at night.
Ferma’s plan is to discuss these key risks with leading experts and risk managers to identify the best way to manage such threats. This will then help risk managers in their discussions with brokers and insurers in the search for more innovative risk transfer solutions.
Speaking yesterday at the Ferma seminar in Brussels, several of the federation’s board members said
Ferma reveals plans to tackle emerging risks with market
INNOVATION DEMANDS: andrew Kendrick, President of aCe european Group, urges his profession to rise to the challenge laid down by the influx of alternative capital. ........ p9-11
Big steps forward on certification planned for Brussels seminar: martínez
INTANGIBLE: turn to p3 REPORTING: turn to p3
CERTIFICATION: turn to p13
FERMA SHOW DAILY21 OCTOBER 2014
BRUSSELS
By Adrian [email protected]
[madrid]—Ferma hopes to take further significant steps forward in the creation of its pan-european certification scheme at its Brussels seminar this week,
according to Isabel martínez, a key member of the project steering committee.
ms martínez, who is head of Finance and marketing at the autonomous University of madrid, told delegates at the risk Frontiers madrid seminar last week hosted by Commercial Risk Europe in
partnership with agers that she is hopeful key elements of the syllabus will be approved this week.
the steering committee, chaired by michel Dennery of French risk management association amrae, planned to meet yesterday in Brussels to hopefully approve key elements of the ground-breaking
project.as well as ms martínez and
mr Dennery the other members of the steering committee are Julia graham, president of Ferma and Director of risk management and Insurance at DLa piper, Jo Willaert,
guide launched on audit and risk committees as eu beefs up reporting rulesAdrian [email protected]
[brussels]—The eurOPean risk management and audit professions took a further step forward in efforts to work more closely to deal with the latest eu risk reporting rules with the launch of a new guide on best practice for audit and risk committees at the Ferma seminar in Brussels.
as they jointly presented the report at a press conference yesterday, Julia Graham, President of Ferma, and Thijs Smit, President of the european Confederation of Institutes of Internal auditing (eCIIa), agreed that there had been an element of competition between risk and audit over ownership of risk management in recent times.
This competition and confusion over who should be responsible for what had led to a duplication of effort and waste of valuable resource, particularly in less mature organisations, conceded mr Smit.
Julia Graham
www.commercialriskeurope.com
News | FERMA 2014
Intangible: time to tackle new risks
3
“It is a fact that in the past risk and audit committees have worked separately on this and about 50% of the work was doubled. This report will hopefully help eliminate that,” said mr Smit.
“Where companies are in the development stage there can be a tendency towards competition between risk and audit, but as companies move towards a more mature model they tend to realise that the two functions are actually complementary and there is a place for both. When the two functions work together they are more effective and it produces a ‘win win’. If there is competition then effectiveness is lost for the company,” he continued.
Commercial Risk Europe’s own european and Global risk Frontiers surveys (both published this week at Ferma) found that many risk managers are frustrated by an apparent effort by audit to take control of risk.
ms Graham, who is also director of risk management and Insurance at the global law firm dla Piper, conceded that this is a perception
among some risk managers, but added that she hoped the publication of the report would help clarify roles and responsibilities so that such complaints will not be heard in next year’s surveys.
“There is still an element of competition between risk management and audit for control of risk. This is exactly what this publication and joint effort is designed to address. It gives clear guidance on the responsibilities and what managers might do to manage these reporting requirements more effectively,” said ms Graham.
“Therefore I welcome this and will certainly put it on the desk of the chairs of the risk and audit committees at dla Piper as soon as I return to the office. This is very valid and also shows the importance of the three lines of defence approach that I think works and a lot of regulators do too,” added the Ferma president.
Ferma and the eCIIa have worked together since 2010 when they issued position papers on the implementation of article 41 of the 8th eu Company law directive.
The main impetus for this latest joint guidance came from the revision
of the directive and adoption of a regulation in april of this year by the european Parliament.
article 39 6) c of the directive amends the scope of the audit committee on financial reporting.
It states: “The audit committee shall…monitor the effectiveness of the undertaking’s internal quality control and risk management systems and, where applicable, its internal audit, regarding the financial reporting of the audited entity without breaching its independence.”
SuBStANtiAL modificAtioN“This is a substantial modification of the original text as there is a shift of focus to external audit and the certification of the financial statements,” stated the joint Ferma eCIIa report.
“recent updates of the 8th directive have focused on the work of external auditors and the increased non-financial information reporting requirements. This means that the burden for audit committees is increasing and the knowledge requirements of their members is
Reporting: audit and risk urged not to duplicate effortcontinued from page 1 evolving,” it continued.
“The new legislation impacts on the corporate governance model of the organisations concerned and it will be important that the eu guidelines take all the actors of corporate governance into consideration. new challenges are affecting the risk management and internal audit profession as they support the audit (and risk) committees in their news duties,” it added.
risk managers and auditors also need to look out for the recent amendment to the accounting directive 2013/34 that covers the disclosure of non-financial and diversity information by large entities and which is estimated to cover some 6,000 groups across the eu.
The so-called nFr (non-Financial reporting) directive requires companies to issue a non-financial statement with their management report that covers the environment, social and employee matters, respect for human rights, anti-corruption, bribery and diversity, the business model and procedures and risks related to these matters, explained the report published yesterday.
that the lack of member satisfaction with their risk mitigation strategies is partly explained by the fact that risk managers increasingly have to deal with less tangible, quantifiable and therefore transferable risk.
For six of the top ten risks revealed in this year’s Ferma benchmarking survey respondents reported a low level of mitigation satisfaction.
These risks are: political/ government intervention; legal and regulatory changes; compliance with regulation and legislation; competition; economic conditions; market strategy; and, human resources.
For three other of the leading risks–reputation and brand, planning and execution of strategy and debt/cash flow–there is a medium level of satisfaction. Only for quality issues, such as design, safety and liability of products and services, is satisfaction high.
iNtANgiBLe riSkS“We believe the low level of satisfaction is explained by the fact that, as a profession, we are migrating from tangible risks towards intangible risks,” said Christina martínez, Ferma board member and director of Corporate risk management,
Campofrio Food Group, at a press conference. These are simply tougher to manage, she said.
In response Ferma plans to organise targeted events and in depth sessions on identified hot topics that will involve a range of risk management and transfer stakeholders. “We are currently organising meetings to become a strategic partner with our stakeholders on these issues,” said ms martínez.
She and Ferma president Julia Graham said that yesterday morning Ferma held such a session on cyber risk.
It involved the unit head of h4, the trust and security department of dG Connect at the european Commission, and a leading figure from Insurance europe, the insurer association, to discuss eu data protection initiatives.
Similar meetings will be held on other matters, including supply chain and environmental exposures, Ferma board members explained. They hope these will allow risk managers and their risk transfer partners to deliver more innovative solutions to these troublesome risks.
“So we have been trying to take these intangible threats and have a voice at the table on these issues in
europe, but also share what we think in the risk and insurance arena,” explained ms Graham.
The Ferma president was keen to point out that this demands as much input and work from risk managers as brokers and insurers.
“We need to be more innovative. The survey results are showing us that we have got to try harder–that is insurers, brokers and risk managers. It is not just about our risk transfer partners. We, as risk managers, also have to be able to ask them the right questions–so it is a shared issue,” she said.
iNNovAtive SoLutioNS“more innovative solutions for some of those intangible areas, either in knowledge, risk transfer or risk management solutions, is what we are going to be looking for. So it is not a question of needing another product it is a question of what sort of solutions we can work on together. I think we are heading that way but it has not yet arrived. So we can have that sort of discussion for all of those intangible areas,” she continued.
ms martínez said that Ferma needs to help risk professionals become business partners in the strategic decision-making process.
“We also need to acknowledge that intangible risks are increasingly on our agendas,” she said. “We need therefore to be more innovative and that is the reason we believe our partners, the brokers and insurers, are essential in the dialogue to find business solution.”
ms martínez said that the increasing number of less tangible risks that Ferma members currently face is a reflection of the ongoing evolution in the role of the risk manager.
her comments back up findings from our Global and european risk Frontiers surveys that suggest a move away from managing easily transferable asset risks towards strategic risks.
“new activities that risk managers are gradually being involved in are business continuity management, the development and implementation of risk culture across the organisation and the alignment and integration of risk management as part of business strategy,” said ms martínez.
“despite this great evolution there is still a long way ahead of us…we are moving and shifting towards more intangible types of risks and the resources and tools that risk professionals need to do their job are consequently changing,” she added.
www.commercialriskeurope.com
Survey | FERMA 2014
5
Ferma’s members say…
Gender gap revealed in risk leadership: average risk manager 50 and earns just over €100,000
[brussels]— rISK manaGerS In leadership roles are overwhelm-ingly likely to be male (80.5%) with just 19.5% female, according to Ferma’s latest benchmark survey re-sults. The average european risk and insurance manager is a man aged between 45 and 55 and earns in the region of €100,000 and €120,000 a year, Ferma’s first European Risk and Insurance Report reveals.
Overall 73% of respondents to Ferma’s latest benchmark survey, upon which the report is based, were male and 27% female. When added to the figures on leadership in risk these num-bers suggest more work is needed to drive diversity in risk and insurance management circles.
focuS oN diverSityFerma’s president Julia Graham, who has made diversity a key goal of her term in office, said on the findings: “Industry could do better and there is certainly room for improvement. The results endorse Ferma’s focus on im-proving gender diversity in our profes-sion.”
The report shows that women make up the majority of the younger
generation of risk managers. however women lose this position quickly as the survey findings move through the risk management career time line. male risk managers predominate in leadership roles from the age of 35. Salary levels for risk managers in leadership posi-tions are also typically higher for male risk managers than for women.
according to the report the typical risk manager works at the head office of a very large company. he has been in his role for between three and 10 years but in the sector for longer. he is likely to have a specific qualification in insur-ance or risk management.
data protection, annual reporting and sii major regulatory concerns [brussels]—DAtA pRotEction regulation (45%), annual reporting/transparency (38%), captive treatment under solvency II (38%) and the possible introduction of mandatory eU-wide financial security (38%) are the chief regulatory concerns of Ferma members at european level.
these findings from Ferma’s 2014 benchmarking survey will help inform the federation on its priorities in Brussels.
the survey finds that data protection regulation (Dpr) is especially important for Ferma members from the banking and financial services sector (73.6%). among all respondents fines and sanctions (33%) and requirements from the national regulator (45%) are the main concerns in relation to Dpr. only 9% of respondents
perceive the appointment of a data protection officer for organisations with more than 250 employees, as proposed by eU Dpr, as a negative requirement.
When it comes to annual reporting and transparency regulation, country by country reporting seems to be a concern because of confidentiality issues (49%). Ferma’s European Risk and Insurance Report 2014 says such detailed reporting may lead to disclosure of too much information on an organisation’s strategy, especially if there is no level playing field with other regions in the world that are not following the same regulatory trend. this could eventually threaten the competitiveness of european companies, the report says.
Quite logically, 60% of captive
owners have chosen solvency II as a regulatory priority for Ferma, but 55% see the forthcoming regime as a useful incentive to implement risk management policy to reduce losses.
The survey also considered the typical number of full time staff dedicated to risk and insurance functions in european firms.n 46% of european companies have between one to three full time equivalent (FTe) staff dedicated to risk and insurance management at headquarter level.
Of course the bigger the company the more resource needed and the survey shows that 56% of companies with a turnover of over €5bn dedicate
n Now in its 7th edition, the Ferma Benchmarking Survey this year received a record number of 850 responses from 21 European countries
Risk and insurance management resource
more than six FTe at headquarter level.This measures against 30% of total
respondents.n 57% of companies with more than 20,000 employees dedicate more than six FTe, against 30% of total respondents.
The survey also shows that listed companies tend to employee more risk and insurance managers than their non-listed competitors. 57% of european listed companies dedicate more than four
FTe at headquarter level, as opposed to 36% for non-listed firms. n 41% of european companies in the banking and financial services sector count more than 20 FTe at headquarter level, compared to 9% of total respondents.n 25% of european companies dedicate more than 11 FTe at regional and/or national level, the findings show.
imag
es: f
reeS
tock
Phot
os.b
iz
European Parliament
Many of our insurance products are loaded with expert services to help safeguard our clients’ assets
(whether they’re financial, physical, human, or intellectual). All done to help your business stay in business.
Try the Beyond Insurance demo at the AIG stand at FERMA.
Insurance and services provided by member companies of American International Group, Inc. Coverage may not be available in all jurisdictions and is subject to actual policy language. For additional information, please visit our website at www.AIG.com. Registered in England: company number 1486260. Registered address: The AIG Building, 58 Fenchurch Street, London EC3M 4AB. AIG Europe Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation Authority.
Go Beyond Insurance on the AIG stand
AIG Beyond Insurance A4 Ad OCT14.indd 1 17/10/2014 10:04
www.commercialriskeurope.com
7
Survey | FERMA 2014
Failure to use analytics by insurance buyers a ‘concern’: Ferma
[brussels]— accorDIng to Ferma’s European Risk and Insurance Report, european companies do not sufficiently leverage analytics when making insurance-buying decisions.
the report, based on the results of Ferma’s 2014 benchmarking survey of its members, finds that insurance-buying behaviours in europe rather tend to depend on budget restraints and rules of thumb.
the majority of respondents still rely on heuristic—an experience-based problem-solving strategy including methods like trial-and-error, rule of thumb and educated guesses—when setting insurance purchasing strategies. 77% use maximum possible loss estimates and 45% rely on claims histories.
tried ANd teSted“While tried and tested by many risk managers, this way of thinking could pose significant problems for the management of emerging risks such as cyber and environmental liabilities,” warned michel Dennery, Vice-president of Ferma.
only 15% of respondents use enterprise risk management tools such as risk financing optimisation to guide their insurance purchasing
decisions. 57% rely on their external consultant for insurance purchasing strategies.
“In line with the findings of the 2014 rIms report, the present Ferma Risk Management Benchmarking Survey 2014 confirms the fact that risk management, technology and data are underleveraged,” said Ferma.
“Both Us-based and european risk managers would like to improve the use of analytics in determining their organisations’ respective risk-bearing capacities, in establishing their insurance-buying strategies and in quantifying specific risks,” it added.
[brussels]—InsUrance-BUyIng sophistication among Ferma members continues to increase with their use of captives expanding, according to the federation’s European Risk and Insurance Report.
Furthermore, it concludes that the use of international programmes grows. Buyers are also optimising their programme structures, particularly in terms of retentions and limits.
captives are owned or used by 39% of the the report’s survey respondents.of those, 33% plan to increase their use of the captive over the next two years for traditional lines of cover and 41% for non-traditional lines.
the report and accompanying benchmark survey also reveal that multinational programmes remain the most efficient way to transfer most cross-border risks.
the exceptions are motor risk, where Ferma members favour local policies, and employee benefits.
the most established lines of business have the highest proportion of international programmes, including property (74%), public liability (82%) and product liability (75%).
Insurance lines most often placed on a master policy-only basis continue to be the more immature, such as directors and officers (24%) and
errors and omissions (15%). however, there has been a 10%
increase in directors and officers international programmes since Ferma’s previous member survey two years ago.
compliance is the key priority for international coverage, with almost two thirds of risk managers (63%) citing this as the reason for implementing local standalone policies in certain countries. only 2.6% view lack of cooperation from local entities as a reason to implement a local standalone policy.
more generally, the report finds that the use of long-term agreements
(Ltas), or rollovers, is increasing, with 50% of risk managers using these in response to the current economic environment.
“as well as being an efficient use of resource for risk managers by reducing the time spent on renewal, Ltas also stabilise premiums at a time when accurate budgets are of vital importance, and strengthen the partnerships between clients and insurers,” said Ferma.
Its report says that insureds continue to optimise their risk transfer mechanisms, taking on more risk and relying more heavily on insurance for catastrophe cover.
Captive use to grow for non-traditional risks
Ferma’s members say…
a lack of understanding of evolving risks, partly caused by limited use of analytics, is having a ‘large impact’ on risk transfer decisions, said Ferma in its report.
this is perhaps highlighted by the fact 72% of members surveyed say their companies do not benefit from standalone cyber coverage.
of the remaining respondents, 19% have standalone coverage of under €50m, 5% have coverage between €50m and €100m, 2% have coverage between €101m and
cyBer & eiL PurchASe Low
€300m and just 1% have cyber risk insured for over €300m.
standalone cyber insurance is most commonly purchased at financial services firms (58%), followed by professional service providers (50%) and telecommunication companies (50%).
When it comes to environmental liability, overall limits purchased are low, irrespective of company size and/or revenue. however, europe’s largest organisations are more likely to take out cover. 38% of companies with more than €5bn in revenue have limits exceeding €50m, compared to a survey average of 22%.
You know your business inside out. You know your markets, your customers, your competitors. Above all, you know the risks facing your business. At Swiss Re Corporate Solutions, we have the capabilities and the fi nancial strength to meet the risk transfer needs of businesses worldwide. But that’s only half the story. Whether your risk is basic or complex, whether the solution is off -the-shelf or highly customised, we believe that there’s only one way to arrive at the right solution. And that’s to work together and combine your experience with our expertise and your strengths with our skills. Long-term relationships bring long-term benefi ts. We’re smarter together.
swissre.com/corporatesolutions
A4 - +3mm bleed - File: ARM-14-05263-P1_CS_General_Cap_FERMA_Report-10-10
Swiss Re Corporate Solutions off ers the above products through carriers that are allowed to operate in the relevant type of insurance or reinsurance in individual jurisdic-tions. Availability of products varies by jurisdiction. This communication is not intended as a solicitation to purchase (re)insurance. © Swiss Re 2014. All rights reserved.
Your insights
Top-classprotection around
the world
Ourstrengths and
expertise
www.commercialriskeurope.com
9
In Focus | FERMA 2014
[london]
TraDItIonaL InsUrers must not shy away from the challenges presented by the influx of alternative capital into the risk transfer sector
and should instead use it as a spur to better meet the needs of their clients, risk managers will be pleased to hear andrew Kendrick, president of ace european group, declared last week.
speaking at an Insurance Institute of London (IIL) lecture, mr Kendrick said the new capital means that traditional players must redouble their efforts on innovation and better service in order to maintain their market position.
In his ‘capital Influx—What Does It mean For London?’ speech the insurer also warned his industry and their supervisors not to let over-burdensome regulation reduce the insurance market’s ability and desire to tackle new and emerging risks.
although addressing the London market mr Kendrick’s comments were also a call to arms to the wider insurance sector. “London and the wider european (re)insurance markets face the same pressures from capital influx, intensifying competition and greater demand from clients for more sophisticated insurance and risk management solutions,” mr Kendrick told Commercial Risk Europe.
STRUCTURE CHAngEaon Benfield calculates that total global reinsurance capital reached its highest ever level of $570bn at the end of June. guy carpenter has described the $20bn of alternative capital that has entered the market over the past two years as ‘the largest change to the sector’s capital structure in recent memory’.
mr Kendrick said ‘this flood of capacity feels biblical in its proportions’ and made clear its effects are certainly not confined to the reinsurance sector. the arrival of so much capacity is now disrupting the usual dynamics of the wider insurance marketplace, he said.
there is also an influx of more traditional-type capital from new
regions and countries to deal with. In addition, the London market has seen a series of new quota share arrangements and broker agreements, such as the Berkshire hathaway-aon arrangement, changing how capacity is deployed in the market.
one of the big questions of course is whether this new form of capital is likely to be a feature of the risk transfer market over the long term or whether it will disappear once losses mount and traditional
investments look more attractive. mr Kendrick, for one, does
not believe that a major loss will necessarily see these new players ‘run for the hills’.
he pointed out that pension funds tend to be long-term investors with some now fully integrated into the fabric of the London insurance market structure. he also noted that some alternative markets are already broadening their line of business and product appetite.
AlTernATive cApiTAl demAnds InnOvATIvE And SERvICE-DRIvEn
insurer response: KendricK
continued on page 11
emerging market investment in London only seems likely to grow, he added. this trend should be encouraged if we want to build a truly international marketplace, he told risk transfer industry colleagues at the IIL lecture held at the Lloyd’s building.
For every headline quota share deal, brokers have been busy creating many more smaller, targeted facilities,
Andrew Kendrick, President of ACE European Group
Promoting simplicity in a complex world
Allianz International Insurance Solutions
Copyright © 2014 Allianz Global Corporate & Specialty SE. The material contained in this publication is designed to provide general information only. Information relating to policy coverage, terms and conditions is provided for guidance purposes only and is not exhaustive and does not form an offer of coverage. Whilst every effort has been made to ensure that the information provided is accurate, this information is provided without any representation or warranty of any kind about its accuracy. Allianz Global Corporate & Specialty SE, Commercial Register: Munich, HRB 208312
Do you manage complex risks across the globe? Allianz Global Corporate & Specialty SE is your best choice for a customized global service.We provide you with tailor-made international insurance solutions: • Expertise: covering the full range of products and services covering corporate and specialty insurance
• World wide: providing extensive international experience and sector specific knowledge
• Tailor made: offering customized client service charter, KPIs and agreed timelines aligned to client requirements
• Experience: Servicing almost 2,000 programs globally and handling more than 15,000 policies annually.
Please call us for more information:
+1.646.472.1441 or
+49.89.3800.3647
www.agcs.allianz.com
IIP_ad_A4_092014_draft1.indd 1 02.09.2014 12:23:55
www.commercialriskeurope.com
11
In Focus | FERMA 2014
and therefore this approach seems set to stay, he added.
But on the flip side he said that the world’s economies are generally in improving shape and when interest rates eventually rise returns on traditional fixed income investments, usually home to much of this new capital, will once again become attractive to investors.
“this could have one of two effects. some sources of capital will begin to look elsewhere for their returns. But those that stay may start to demand improved returns from their investment. either response should, in theory, help reduce the pressure [on traditional insurers],” he said.
he also said that post the financial crisis there appears less appetite from insurance buyers to allow transfer vehicles to become overly complicated or risky. he said many risk managers have reacted to the new options with caution.
“I’ve been interested to see the mixed reactions among the risk managers of europe’s biggest companies to the rise of alternative capital. at the heart of this, I suspect, sits a concern about the difficult issues it can throw up—including tax, and other consequences of using contingent capital that doesn’t fit with established risk transfer structures,” he said.
FInITE FLOWhe also pointed out that although many investors have successfully entered the risk transfer market, ultimately their appetite for insurance risk is finite and so the flow of capital is likely to be finite too.
the good news for risk managers demanding innovation from the insurance market to help tackle emerging and to date uninsurable risks is that mr Kendrick believes the new competition from alternative capital demands a more creative approach from their traditional insurance and broking partners.
conceding that there is a ‘sense of frustration on the part of some larger clients that the insurance industry seems unable or unwilling to innovate’, mr Kendrick urged his colleagues to help risk managers tackle non-traditional risks caused by threats such as pandemics and increasingly complex supply chains.
“I’m not suggesting for a moment that all of these risks are fully insurable or that London should be taking on challenges it doesn’t understand. But I do know that risk managers want and need more support from the industry,” he said.
“I believe that if the expertise
exists anywhere to make progress in developing solutions—whether through insurance or other risk management services—it is here in London,” he added.
While he said that the London market continues to lead in complex areas of risk such as terrorism and political violence he questioned whether it is in danger of ‘losing its mojo’.
he is concerned that London ‘may not be punching its weight by leading the development of some other emerging risk solutions’.
“I believe there is more that London could and must do to lead the charge in developing real relevant, emerging risk solutions. and that means underwriters, brokers and lawyers and other service providers working together to unlock and leverage our collective expertise,” he said.
a further benefit for buyers from the increased competition for their business is that insurers, according to mr Kendrick, need to deliver superior service and a more client-centric approach.
“a hedge fund cannot, at least on its own, act as a true partner to an insured, successfully providing consultancy, risk management planning and—in a word—service. so if we are to differentiate ourselves from the newer alternatives, then I believe that traditional players will need to become more customer-centric,” he said.
he added that ace is trying to better understand what brokers and clients want from their insurers. “one of the things that has become clear to us is that even the basics sometimes aren’t being delivered consistently enough, and there is a real opportunity to differentiate on service,” he explained.
an important part of this is claims service. mr Kendrick believes there is room for insurers to be more proactive in this area.
“Insurance is a service industry and the claims offering should be
at the heart of our proposition. yet sometimes we only seem to talk to insureds about claims when they have a loss. I believe there needs to be more work upfront on agreeing shared protocols and servicing needs. and all of this can only really be achieved by putting claims at the heart of the relationship, from day one,” he said.
REAL OppORTUnITYspeaking to cre mr Kendrick said that the insurance market needs to guard against complacency for three reasons. “one, some clients are demanding more sophisticated emerging risk management support than they feel they are currently receiving from their brokers and insurers; two, I believe there is a real opportunity for traditional players to distinguish their proposition from that of the growing number of alternative providers because of their capability to offer superior and bespoke service; and three, when the market is as competitive as it is with margins squeezed, insurers and brokers could be tempted to reduce investment in innovation and service and to do that now could be short-sighted and dangerous,” he explained.
he added that brokers are ‘absolutely key’ to the delivery of service and innovation.
they have an extremely valuable role to play, not just in designing the right insurance programmes, but also in providing the consultancy, wider risk management services and scenario planning support that risk managers are now seeking for a wider range of risks, he said. “the only way that the insurance market can meet clients’ increasingly sophisticated needs is as part of a constructive, close tripartite relationship,” he continued.
mr Kendrick went on to warn that the increasingly complicated global regulatory and supervisory backdrop facing insurers is moving further away from any kind of meaningful harmonisation of eU and global rules. this makes it harder for the market and therefore their clients to conduct compliant business across borders, he added. he is concerned
continued from page 9 that this may detract from insurers’ willingness and ability to innovate and called on his industry and their supervisors to address this issue.
“as I look around the market, I wonder what effect these growing regulatory complications will have on our entrepreneurial spirit. We need to ensure that the pace of regulatory change does not slow innovation down. the amount of time that we spend on regulatory and compliance issues has increased dramatically over the last few years. I detect an increasing concern on the part of many that, if left unchecked, this could distract insurers from taking on new risk challenges, or distract management teams and boards from running and growing their business,” he said.
he believes supervisors are willing to listen to insurers’ concerns and that it is time to take advantage of open dialogue.
“our goal must be to achieve the right balance. one that ensures our regulatory approach is robust, world-class and fully protects those it sets out to. and at the same time, one that encourages London’s entrepreneurial spirit to flourish, without the unintended consequences of losing the flexibility that our clients want and need, or indeed losing our business to alternative capital markets,” suggested mr Kendrick.
In conclusion mr Kendrick said there is no question that capital and capacity trends are radically reshaping the insurance marketplace and he believes they will continue to do so.
“some of the emerging capital trends, such as investment from asia and the middle east, we will actively want to encourage for many reasons. others may leave us with mixed feelings, as victims of circumstance,” he told fellow insurers.
“But we aren’t playing a zero-sum game. this isn’t time to pull up the drawbridge, and retreat into the cosy comfort zone of the past. that approach may not lead to sudden death. But it could bring a slow, terminal decline. Instead, we need to take advantage of the opportunity that this new capacity brings to stimulate our risk appetite and creativity,” he added.
“I believe there is more that London could and must do to lead the charge in developing real relevant, emerging risk solutions. and that means underwriters, brokers and lawyers and other service providers working together to unlock and leverage our collective expertise”
Protecting businessesagainst Cyber risks
Cyber Sphere
Cyber
axa-corporatesolutions.com
www.commercialriskeurope.com
13
News | FERMA 2014
Certification: Hoping to speed up certification process
Vice president of Ferma and risk manager for agfa gevaert in Belgium, and Florence Bindelle and pierre sonigo of Ferma.
the certification project, as ap-proved by the Ferma committee in June, is broken down into four key blocks, explained ms martínez last week. these are knowledge, ethics, experience and continuous profes-sional development.
risk managers who seek to be certified will have to demonstrate skills, experience and training in each block up to a level set by the commit-tee responsible for each section.
ms martínez is chair of the knowledge block, which is further broken down into seven more blocks. these are the business basis for a risk manager, essentials of risk manage-ment, risk assessment, risk treatment I, risk treatment II, risk communi-cation and review and specific risk management topics.
ms martínez confirmed that the certification process will recognise the difference between experienced risk managers and newcomers to the job.
to obtain the basic ‘passport’ certification risk managers will, for example, have to show evidence of 150 hours of training via accredited forms. some 200 hours of training will need to be shown to obtain the advanced certificate, she explained.
future PLANNiNgms martínez stressed that the certi-fication process was never intended to be simple or easy to obtain. “this can’t be done in one day! We want to create risk managers for the future,” she told delegates last week in madrid.
the meeting planned for yester-day in Brussels will hopefully have made an important decision on the syllabus for the knowledge block, said ms martínez.
“Block 4 was approved by the board in July. We are now creating the syllabus. next monday (yesterday) we have a meeting and I would like this part of the syllabus to progress much faster and be ready by year-end,” she told delegates at the event last week sponsored by ace.
ms martínez told spanish risk managers and insurance market professionals present that the certification project should not be underestimated and needs to be taken seriously.
“this has been a long process and we are about to end it,” said the agers board member. “european cer-tification is one of the most relevant projects developed by Ferma over the past two years. It has the full support of member associations. the national associations recognised that more harmonisation was needed at the european level,” she continued.
ms martínez gave a clearer idea of exactly how the certification would work in practice as she explained details of the experience block that is chaired by mr sonigo.
this committee has identified some 111 tasks for the risk manager. ms martínez said that each risk man-ager does not have to directly handle each task but must show evidence of a directing role and should cover at least 60% of the tasks.
this block is divided into four parts. these are framework, process, claims handling, and claims manage-ment. each element is given a value.
“you don’t have to carry out all 111 of the tasks but you do need to cover the indispensable tasks. For certification the risk manager should cover at least 60% of the tasks,” explained ms martínez.
the spaniard raised smiles at the risk Frontiers seminar as she revealed that two weeks ago she suggested at the Brokerslink meeting in Venice that all Ferma board members should go through the certification process first.
“We will carry out the launch test in the first and second quarters of 2015,” explained ms martínez. “the Ferma board should go through all stages. Let’s see if we comply with our own requirements, I suggested that!” she said.
RepoRteRS: [email protected]
GeNeRAL eDItoRIAL: [email protected]
UK / IReLAND: Stuart Collins, Tony Dowding, Nicholas Pratt, Garry Booth
FRANCe / SpAIN: Rodrigo Amaral
GeRMANY: Anne-Christin Groeger, Friederike Krieger, Herbert Fromme
pRoDUCtIoN eDItoR: Annabel Foster
EdITORIAL dIRECTORAdrian LadburyTel: +44 (0)1202 764 834 [w]
+44 (0)7818 451 882 [m][email protected]
PuBLIshING dIRECTORHugo FosterTel: +44 (0)1892 785 176 [w]
+44 (0)7894 718 724 [m][email protected]
ART dIRECTORAlan Booth—www.calixa.bizTel: +44 (0)20 8123 3271[w]
+44 (0)7817 671 973[m][email protected]
WEB EdITOR/dEPuTy EdITORBen NorrisTel: +44 (0)7749 496 612 [m][email protected]
for commercial opportunities email [email protected]
To subscribe email [email protected]
Commercial Risk Europe is published monthly, except August and december, by rubicon media Ltd.—registered office 7 granard Business centre, Bunns Lane, mill hill, London Nw7 2dQ
Isabel Martínez
continued from page 1
While every care has been taken in publishing this report neither the publisher nor any of the contributors accept responsibility for any errors it may contain or for any losses howsoever arising from or in reliance upon its contents. Editor:
Adrian Ladbury • www.commercialriskeurope.com • Published by Rubicon Media Ltd © 2014
ruBicoN mediA Ltd. © 2014All rights reserved. Reproduction or transmission of any content is prohibited
without prior written agreement from the publisher
To register please go to www.commercialriskeurope.com/RFStockholm
08.15–08.45—REGISTRATION AND COFFEE
08.45–09.00—WELCOME ADDRESSESWelcome address from Adrian Ladbury, Editor of Commercial Risk Europe and host for the day Susanne Ström, Vice President, SWERMA and Bror Sandas, Country President, Nordic Countries, ACE European Group
PART I: THE STATE OF THE CORPORATE INSURANCE MARKET: CAPACITY, PRICE, EFFICIENCY AND INNOVATION
9.00–9.20—THE BIG PICTURE Are demand and supply of corporate insurance coverage in equilibrium and what is the outlook?
Adrian Ladbury reports on the big picture outlook for the insurance market based on meetings with reinsurers and brokers at the Monte Carlo and Baden-Baden reinsurance meetings, analysis from the credit rating agencies and equity analysts and meetings with the leading international corporate insurance groups and brokers at the Ferma Forum in Brussels. He will also report on what risk managers in Europe and worldwide would like to see their insurers and brokers do to improve the way they deliver products and services to their customers based on CRE’s annual Risk Frontiers survey. Do the wants and needs of customers and suppliers match?
9.20–10.05— HOW TO DESIGN THE OPTIMAL MULTINATIONAL PROGRAMMEMichael G Furgueson, President, Global Accounts EMEA, ACE Group
ACE’s latest research reveals that client demand for multinational programmes is set to grow further in Europe over the next three years. But expanding geographical footprints and divergent regulation mean there are many complexities that clients, brokers and insurers need to navigate to achieve an effective programme and good service is becoming even more important to delivering compliance. Based on the latest developments, this session will highlight a number of specific issues that need consideration to develop and implement an optimal programme.
10.05–10.35— THE CORPORATE INSURANCE MARKET IN THE NORDIC REGION
Jacob Schlawitz, CEO, Aon Nordic
n What capacity is available currently for corporate insurance managers in the Nordic region in the major lines?
n How competitive is the market currently and what is the pricing outlook for corporate insurance in coming renewals, what is driving this pricing and capacity trend?
n What has the loss history been like over the last 12 months—have loss ratios worsened or improved and have there been any significant losses?
n What impact will the arrival of Solvency II have upon the corporate insurance market in Europe and the Nordic region and how should insurance managers prepare for this?
n Have there been any significant coverage developments in recent times and what can corporate customers look out for in future?
n What new products are customers demanding and what is the market doing about this? Where is the innovation in critical areas such as cyber, supply chain and environmental?
n What improved services are demanded and how is the market reacting? How are insurers improving the way claims are agreed and settled?
n Is the market happy with the speed and efficiency of premium payment? Are contracts issued the moment premiums are paid and if not why not?
n How can cost be cut out of the system without lowering quality standards? Are brokers paid too much?
n What could and should the insurance market do to make global programmes more efficient and assure policyholders that they are compliant?
n What could and should regulators do to help make this happen?
10.35–10.45 — Q&A WITH SPEAKERS
10.45–11.15 — COFFEE BREAK
PART II: RISK REGULATION AND REPORTING
11.15–11.45— THE EVOLVING EUROPEAN AND SWEDISH REGULATORY LANDSCAPE: SOLVENCY II, CAPITAL AND REPORTING RULES AND THE DEATH OF THE CAPTIVE?
Senior representative of Finansinspektionen, the Swedish regulator
n Is Solvency II on target, how will it be implemented in Sweden and what impact will it have upon the Swedish insurance market?
n What impact will Solvency II have upon the captive insurance market? What is the latest guidance
available to captive owners about how the rules need to be implemented?n What discussions and consultation have been held with corporate insurance buyers about Solvency
II and captives and how has the regulator attempted to react to their needs? n What other rules are on the agenda in Europe and Sweden that the regulator is working on and
which risk and insurance managers need to be aware of and prepare for?n What about global programmes? Is there any chance that the International Association of Insurance
Supervisors (IAIS) could deliver a standard that would help create a more level playing field and give risk managers greater assurance that their programmes are compliant?
n How could and should captive owners and insurers prepare for the introduction of new accounting standards for insurance companies?
11.45–12.15— RISK REPORTING, DISCLOSURE AND SANCTIONSn What is the point in risk reporting and why has it become such a hot topic in Europe and
internationally?n What are the main European and international risk reporting and disclosure rules that European
corporations currently have to adhere to?n Are there any new risk reporting, corporate governance and disclosure rules that risk and insurance
managers and the wider insurance market need to be aware of? n What will the directive on non-financial reporting require of companies? Why does the EC want to
introduce these new requirements and what will they achieve? n How do credit rating agencies use risk reporting? What progress has been made by Standard &
Poor’s on its enterprise risk management rating system and do the other rating agencies have similar plans to rate the quality and effectiveness of risk management?
12.15–12.30—Q&A WITH THE TWO SPEAKERS
12.30–2.00—LUNCH
PART III: THE EMERGING RISK LANDSCAPE
2.00–2.45—CYBER RISKKyle Bryant, Regional Manager, Cyber Liability, Continental Europe, ACE Group
n What is cyber risk?n How is the risk identified and measured?n Who should be responsible for the identification, measurement and management of cyber risk?n How could and should risk managers work with other key departments such as IT, marketing and
legal to make sure these risks are effectively managed?n What are the latest loss trends?n What insurance coverage is currently available for cyber risk, which insurers and reinsurers are
offering the capacity and how is it priced?n What are the latest coverage developments and what are the major gaps that risk managers would
like to see filled?
2.45–3.00—Q&A
3.00–3.45—POLITICAL RISKn What is political risk?n What are the latest sanctions imposed that corporations need to be aware of?n How are these risks best identified and measured?n Who should be responsible for the identification, measurement and management of political risk?n How could and should risk managers work with other key departments such as marketing and legal
to make sure these risks are effectively managed?n What are the latest loss trends and where are the hotspots that companies need to look out for
when expanding to emerging markets?n What insurance coverage is currently available for this market?n What about trade and export guarantee insurance—how healthy is this market? n Which insurers and reinsurers are offering the capacity and how is it priced?n What are the latest coverage developments and what are the major gaps that risk managers would
like to see filled?
3.45–4.00—Q&A AND CONCLUDING COMMENTS
CONFERENCE ENDS
SPONSOR:
Risk FrontiersEMERGING RISK, RISK REGULATION & MARKET DYNAMICS IN THE NORDICS20 NOVEMBER, 2014CLARION HOTEL, RINGVÄGEN