A panel of high-level multinational insurers fought back against criticism that their industry is slow to innovate and not always willing to pay claims. However they admitted that there were areas where the industry, together with risk managers, could improve.
During a panel debate on Monday leading risk managers at large European corporates said insurers needed to focus on improving core competencies, in particular to demonstrate their willingness to pay claims. The sector was criticised for being too conservative and not providing contract certainty or good service for all but the very largest claims.
Lloyd’s Chief Executive Officer, Richard Ward, said insurers can surely do better on claims. Claims are seen as the ‘unsexy’ part of the insurance business, but is the most important area, he said. “The nub of insurance is the payment of claims, the ability and willingness of insurers to pay", said Mr Ward.
Mike McGavick, Chief Executive of XL Insurance, told the assembled risk managers that it is unrealistic to believe that claims disputes will not occur. “The truth is that claims arise in unexpected ways… and don’t always fit neatly into what is discussed up front. There is a potential for disputes, so it is important to choose an insurer based on their attitude to claims. Some insurers will view a claim payment as their money while others see themselves as the custodians of your money", he said.
What risk managers really want from insurers is stability and continuity, according to Axel Theis, Chief Executive Officer at Allianz Global Corporate and Speciality (AGCS). “Claims are the proof of the contract and are the reason for us being here", said Mr Theis. “We learn from claims and improve the risk and future cover", he added.
According to AIG’s Executive Vice President and Chief Executive Peter Hancock, who also spoke on the panel, too often outdated wordings exist in insurance contracts. According to Mr Hancock, insurers need to invest in new data sets in order to solve the problems faced by clients. For example, supply chain risk needs collaborative data gathering with risk managers, he suggested.
Zurich Insurance has seen an uptick in demand for its supply chain cover in recent months, according to Thomas Hürlimann, Chief Executive Office of Zurich Global Corporate. “Buyers should not underestimate how long it takes to get a solution that is fit for purpose", he said.
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