The FERMA Forum differs from the Reinsurance Rendezvous in Monte Carlo, as it is mainly attended by corporate risk managers, rather than reinsurers and brokers. This year, however, two overriding concerns were uppermost in the minds of those attending both conferences. The ongoing integration and communication between clients – in this case risk managers – brokers and insurers, was an overriding theme at both events; as was the need to attract new talent into the industry.
Julia Graham, the outgoing president of the Federation of European Risk Management Associations (FERMA), set out three fundamental themes for the organization’s 21st biennial conference in Venice, Italy. She installed “Profession, Innovation and Diversity” as leitmotifs for risk managers, insurers and brokers.
New risks are constantly arising. Both conferences examined IT problems involving cyber and reputational risks, as well as climate change and non-property damage related business interruption, but there are certainly other risks that occupy the minds of risk managers, or will do so soon.
The risk manager’s role has become increasingly important over the years, as the job of identifying and taking steps to mitigate the risks their companies face requires ever greater understanding, not only of the risks, but also of the corporate culture that faces them.
Risk managers started out as mainly buyers of insurance, which was the principal way they defended their companies. Those days are long gone. Today’s risk manager “plays a far bigger role,” Graham said in her opening remarks, adding that the Forum’s program “reflects the realities of a new world.”
Insurers and brokers realize that they can no longer simply sell insurance or act solely as intermediaries. They have become risk advisors as well. As RIMS President Rick Roberts pointed out in the “Professional Panel” presentation, “20 or 30 years ago that probably wouldn’t have been possible.”
Now, however, interacting with clients has become a necessity, as the number and complexity of the risks increases. In order to mitigate those risks, and to prevent losses from happening, insurers can’t simply sell coverage. In the commercial sphere they must collect and analyze all the data available to find the best solutions for their clients, which may, or may not involve issuing an insurance policy.
In his keynote speech Generali’s CEO Mario Greco described the world’s risks as “global,” meaning that they must be addressed on a worldwide scale and not simply as problems for local risk managers. Doing so requires “agility” as well as the ability to think outside the box by considering “outrageous ideas.” It also means creating “working partnerships.” Risk managers should interact with brokers and insurers to find the best solution(s) to mitigating any given risk.
In the “Presidential Debate” presentation on Tuesday afternoon Andreas Berger, chief region and markets director for Allianz Global – Corporate and Specialty, described coping with all of the new realities as “keeping us [the insurance industry] awake at night.” For instance, statistical predictions indicate that there will be 50 billion mobile phones by 2025, and that investments in technology will exceed $14 trillion.
He also hit on a third theme that was present at the Reinsurance Rendezvous – the speed of the changes that are taking place, which affect, and will continue to affect, the entire industry.
Berger predicted that with the evolution of business models – Amazon, Facebook, Google, Twitter, etc. – “40 percent of the current Fortune 500 companies won’t be there in 10 years.”
Brokers and insurers “must do more than risk transfer,” he continued. “They need to move beyond insurance and become end to end risk partners with their clients; therefore, they have to change the way they do business. They must sit down with their customers and find out what they need.”
The insurance industry has recognized that necessity, and is responding in a number of ways. In the “Innovation” presentation, Willis CEO Dominic Casserley and Todd Curry, CEO of Aon’s Center for innovation and analytics in Dublin, described how the industry is changing. “We have to change what we do and how we do it,” Curry said. He described how brokers can work with “tech companies” to see what their clients need, and then work with the carriers to see that they get it.
Risk managers are an important part of that relationship, as they are the ones who act for the ultimate clients – the companies. FERMA has taken a major step forward to make sure those connections are made and strengthened. Beginning next year Europe’s risk managers, who have successfully passed a rigorous test, will receive certification as accredited risk managers.
In a separate interview Jo Willaerts, a former broker and FERMA’s newly installed president, will be in charge of implementing the certification process. It will not only enhance the standing of risk managers, but will also enable them to talk directly to senior management about the risks their companies face.
The present situation for risk managers, brokers and insurers recalls an anecdote from the past: Winston Churchill is reported to have asked General Charles De Gaulle: “Tell me, general, how do you govern a country with more than 200 different kinds of cheese?” to which De Gaulle is said to have replied; “With great difficulty Monsieur Prime Minister.”
It is the insurance industry that now faces “difficulties.” It must surmount them in order to survive.
Topics Carriers Agencies Market Risk Management
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