At a glance
- Nick Major, Chief Underwriting Officer at Zurich Global Corporate, offers his view of the market as we enter the second half of the year
- Challenging landscape for insurers with new capacity, price competition and low investment returns
- Zurich continues to differentiate itself from other carriers with focus on providing insight and value
In a market characterised by overcapacity, intense price competition and low interest rates, delivering a sustainable profit to support investment in growth and product development is a significant challenge for insurers – but one that Zurich Global Corporate is responding to proactively.
“Zurich is well positioned to differentiate itself in a crowded marketplace” says Nick Major, Chief Underwriting Officer at Zurich Global Corporate.
With a focus on providing risk insight and long-term sustainable pricing, as well as service excellence, a global network and a fast, effective and transparent claims process, Zurich is offering real value to professional risk managers seeking a blend of capability and competitive capacity when structuring their risk transfer programmes.
Nick Major is the Chief Underwriting Officer (CUO) for Zurich Global Corporate in the UK (GCUK) business area.
Nick began his career in insurance with RSA and joined Zurich in 2003 as a Senior Property Underwriter. In 2007 he was appointed Head of Property for GCUK and in February 2011 was made Head of First Party Risk and interim CUO. He was appointed CUO in October 2011.
“We don’t trade purely on price, but on our ability to harness our insight, expertise and resource for the benefit of the customer, from pre-loss scenario planning to risk engineering and claims management, all supported by a network of local offices that meet the needs of global and complex customers,” says Nick.
Delivering insight to customers is increasingly dependent upon an insurer’s ability to interrogate ‘big data’ to identify emerging risks, loss trends and benchmarking that enables customers to make informed decisions on risk management and future proofing for their organisations.
“Brokers have developed effective data management tools and the best outcome for the customer is achieved when brokers and insurers work together to leverage data to provide improved insight,” says Nick. “Together, we can begin to deliver the innovation that customers demand.”
Difficult market environment
Of more immediate concern as we head into the second half of the year, are the continuing competitive conditions in the London market. This is exacerbated by new Asian and specifically Chinese capacity that is becoming increasingly visible in London.
While the benign weather conditions in 2013 kept catastrophe losses for the market to a minimum for a second consecutive year, providing a much-needed boost to insurers’ bottom lines. But pressure remains on the top line, with many insurers seeking growth in an overcapitalised market place.
When normalised natural catastrophe conditions return, insurers could see margins, which are already very tight, squeezed yet further. The challenge for insurers is to communicate to brokers and risk managers the requirement for a fair return to support investment and the long-term pattern for loss expectancy
‘Sidecars’ drive into view
Alternative capital – with the introduction last year of Aon’s co-insurance ‘sidecar’ agreement with Berkshire Hathaway, followed by the similar Willis Global 360 facility – has been the subject of much debate in London insurance market over the past year or so.
Although not a new phenomenon, sidecar arrangements are an increasing feature in the global corporate landscape.
Acknowledging the potential efficiencies for customers, brokers and insurers, Zurich is open to discussion with all brokers on facilities within its underwriting appetite. Indeed, they can be regarded as complimentary to Zurich Global Corporate’s traditional focus as a holistic risk provider for its customers.
With overcapacity in the market place, Nick believes there is a danger that brokers are more complacent in their approach to the market and specifically the quality and timing of submissions. With the onus of disclosure resting with the customer, it is a broker’s responsibility to continually drive the most transparent and comprehensive presentation of risk possible.
“We are seeing a deterioration in the level of information, quality and accuracy being provided by brokers – this has the potential to compromise the insurer and the customer,” cautions Nick.
Zurich is well positioned to differentiate itself in a crowded marketplace
Nick Major, Chief Underwriting Officer at Zurich Global Corporate
“The best way to avoid any kind of discussion or concern around non-disclosure is to provide a thorough presentation to an insurer including full disclosure of information that has been reviewed and signed off by customers, but unfortunately we are not seeing this consistently.”
Emerging big-ticket risks
Finally, new risks are emerging all the time, and one area on the radar of insurers is that of driver-less cars. Google has invested heavily in the concept – the cars have no steering wheels, brakes or accelerators; using just a computer to steer the vehicle – and have been tested on US roads. The UK is currently looking to change the Highway Code to accommodate such vehicles.
“Driver-less cars threaten to change the whole dynamic of motor insurance,” says Nick. “Who is ultimately responsible for the risk? The person who designed the technology or passenger in the car no longer driving it?
“This is a disruptive technology coming into our industry, which will have a significant impact on personal lines and corporate as well. For me, it is a much bigger issue than cyber. But that is the challenge for insurers – how we respond to these threats.”