05 September 2013

CRE: Insurers and customers lock horns over innovation

Innovation, or rather the lack of it from insurers, was the big topic of debate at the opening morning of the DVS Symposium in Munich, as two industry heavyweights clashed in a fundamental debate about how this critical topic could and should be tackled.

First up was Hans-Jürgen Allerdissen, President of the DVS and Insurance Manager for Deutsche Bahn, who opened the event with a firm criticism of the track record of insurers in response to new and emerging risks. Mr Allerdissen said that he believed fear of internal controls was making it difficult for insurers to take on such risks and hampered creative thinking among insurers. Mr Allerdissen acknowledged that insurers complain about customers who call for new solutions but then refuse to buy them when released because they see them as inadequate.

Axel Theis, Chief Executive of Allianz Global Corporate & Specialty (AGCS), emerged from the opposite corner later yesterday morning with his gloves raised to defend the position of the insurers. He said that the provision of adequately broad solutions and sufficient capacity for new and emerging risks will take some time and called for patience among commercial buyers. But Mr Theis warned that to not buy insurance cover is no solution, and in particular not one appreciated by the capital markets. Mr Theis argued that if insurers take incalculable risks that could potentially weaken their capital strength it would not be in the long-term interest of customers. The financial strength of insurers is already under pressure from the regulatory environment, he said.

Mr Theis took the opportunity to criticise recent regulation which he said tries to direct insurers’ investment in the wrong way. “It might happen that the same insurers whose way of doing business acted as a stabilising factor during the Euro crisis because they are long-term oriented investors, will now be forced to redirect their investment strategy on a more short-term basis”, he warned.

Mr Theis also noted that a recent survey of customers carried out by new AGCS chief executive for Germany and Central Europe, Christopher Lohmann, found that solvency is a key factor for customers when they judge their insurers. Reliability, technical know-how and last, but not least, fair and speedy claims handling were the other main factors cited in the survey.

Mr Allerdissen earlier had voiced his fear of a ‘fragmentation’ of the insurance buying community, partly because of the categorisation strategies followed by insurers. Small and medium-sized customers in particular were feeling the pinch from increased pressure during claims handling, said the DVS President. “It would be stupid to believe that the economic, organisational and legal changes to the framework will remain without consequences for claims management”, he added.

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