Swiss buyers cite property, ESG and cyber among remaining areas of market concern

Insurance market conditions are improving for Swiss buyers but there remains areas of concern such as cyber, international property, transition risks and a lack of credit for ESG credentials. And although leading Swiss insurance managers welcome the end of the hard market, they are wary of an acute swing to softening and yet more price volatility that would, ultimately, lead to further corrections and never-ending market cycles. What they want above all else, it seems, is stability. Sirm board members have told Commercial Risk Europe that the insurance market is improving for buyers as competition mounts. “Insurance market conditions are currently not as hard as 12 months ago and some new players are trying to participate with their capacities in certain business lines,” said Michael De Boni, head of corporate treasury and insurances at Forbo Management. “This is good news for the competitiveness in the markets for the next 12 months.” And while several of his peers, alongside brokers and insurers, report similar news, some buyers fear that the market will likely now slip into a softening phase that will ultimately lead to price and coverage corrections again down the line. They argue that these cycles simply don’t deliver the partnership, sustainability and certainty that they and their bosses crave. “You might think that a growth strategy at an insurance company is only positive for a risk manager, but keep in mind that pricing low is not a sustainable solution. Hence, after some time the premiums will increase. Now, as we all also have to think commercially, it is not possible to ignore the lower-priced offers, even though it means maybe having to go to the market again in a rather short period of time. So in short, yes, currently we get value for money, but not with a certain price tag attached to it,” said Stefan Günther, head of insurance at Coop Genossenschaft. Rocco Bozzelli, head of global insurance at MSC Cruises, holds similar views. “For many years, war risks were good risks for insurers, and many insurers and brokers were hunting for war risk premiums. Then when the risk unfortunately became tangible, some players pulled out from the market and rating exploded in several areas of the world. I don’t think this is entirely fair because what we really want is partnership with our insurers,” he said. “So if insurers take an opportunistic approach of stepping in and out of a particular market or risk, this is not what risk and insurance managers are really looking for. We prefer stability and something that is more reliable rather than market swings,” he continued. According to Pierre-Louis Chabert, director of insurance and risk management at Alcon, the outlook for the commercial and corporate insurance over the next 12 months is varied by lines of business. And he urged insurers to demonstrate more “flexibility, innovation and a willingness to take on new risks” in areas of the market that remain hard, and encouraged carriers to deliver solutions for emerging threats. This approach would ensure insurers are providing real value for money and adapting to the evolving risk landscape, continued Chabert. He would also like to see more transparency over how insurers use ESG data and whether it impacts underwriting decisions. “Generally speaking, there is a lack of transparency regarding how an insured’s ESG efforts impact their insurance premiums and access to insurance capacity” he said. “To ensure that companies receive credit for their ESG initiatives, insurers should develop clearer metrics and guidelines that directly link ESG performance to premium adjustments. Ultimately, the ideal would be a close partnership between insurance buyers and insurers where the latter would actively promote ESG initiatives with tailored insurance solutions. This would encourage more robust ESG efforts and provide insured parties with tangible benefits for their initiatives,” said Chabert. Bozzelli said that although a number of insurers are asking for more and more ESG information, he doesn’t see any impact yet on rating or underwriting decisions. The Sirm board member said this issue is currently a big topic for the Swiss risk and insurance management association. “It is not fully clear to me what the information is used for. If I compare the banking industry to the insurance industry, it is clearer what ESG data is used for by the former. I think it will start to have an impact on the credit we get from insurers in the future but I don’t see it yet,” said Bozzelli. And he would like insurers to be more flexible in helping companies that are moving through the “transitional phase of the sustainability revolution” and targeting net zero by 2050. “We need to meet these targets so the insurance industry should be more flexible during this phase and support clients. A practical example is covering prototypes. Usually these are things that you don’t want to insure because they are new and you don’t have a track record. However, with the decarbonisation transition, we will see more and more prototypes, so I think the insurance industry should change this approach and try to support clients that are investing in R&D to reach those targets. Unfortunately, the insurance industry hasn’t been quick enough traditionally,” said Bozzelli. But he conceded that there remain barriers to solving this issue. “Where there may be problems is insurers will want to fully understand these protypes, whereas clients may not be so keen to share all the information because they see these prototypes as a competitive advantage. That is the big issue I see,” he said. Stefan Günther, head of insurance at Coop Genossenschaft, agreed that the commercial market is improving for Swiss buyers but said the most worrying areas are cyber and large property. “In terms of capacity available and price, it would still be cyber. However, we do see a trend to significantly more capacity at a reasonable price in cyber,” he said. Adding: “There seems to be a trend to reduce the capacity in property. If that trend continues or even becomes stronger, it will be a serious challenge to risk managers of large international companies, as it eliminates the market to some extent if all of the major insurance companies are already involved in your property programme.” And De Boni agrees that the property damage/business interruption and liability markets remain tight with limited capacities, at least for riskier corporates.

Swiss buyers cite property, ESG and cyber among remaining areas of market concern

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