Too many insurers expect their commercial clients to navigate the insurance sector’s quirks, rather than designing protection around the customer
Insurers need to stop asking risk managers to work around how the insurance industry’s products work, and start tailoring their products around how their clients’ businesses work, Tony Buckle, managing director of RSA Global Risk Solutions, told StrategicRISK.
“The industry is lazy; they’ve got into a product mentality,” Buckle said. “We’ve got to get much more involved in the problems of the client to offer better solutions.”
He notes, for example, that somebody might identify themselves as a US liability underwriter. “That’s the sort of product mindset that we’ve got to break away from if we’re going to be strategically relevant to customers.
He uses another example of a manufacturer of luxury products, for whom the product must arrive to clients in perfect condition, and brand value is of the highest importance. The insurance market would push different cargo and property policies, depending where the product is and whether it’s in transit.
“Let’s offer a combined product, because as far as the client is concerned, it can’t be allowed to fall between the two,” said Buckle. “For too long the insurance market has said ‘this is how we operate, and you navigate around us’. What we should be saying is the opposite: ‘Tell us how you operate – we’ll navigate around you,’” he added.
Cyber products are another example of changing thinking, he suggests. “A cyber attack is just the trigger, but the real issue is business interruption caused by cyber risk,” said Buckle.
At the cutting edge of cyber protection, firms actually want to be breached, Buckle suggested, but also to keep control of that situation. “You corral the attacker into one area and give them false data sets. That way you’ve seen what weaknesses they’ve exploited and also what they’re interested in,” he explained.
Partnering closely with brokers is important for insurers, he emphasised, partly to emphasise value rather than rate, which could see insurers commoditise products of lower quality in a pricing race to the bottom.
“But if the assumption among the broker community is that we’re going to renew at minus ten percent each year, then we’re headed very quickly towards commoditisation. Therefore, what we need to be asking is ‘what to customers need to strategically enhance their business?’ We need to be thinking about what’s relevant to the board-level executives,” he said.
These concerns, broadly speaking, Buckle identifies as: facilitating growth; boosting top line income; enhancing the cashflow of the business; and helping reduce the compliance risks of regulation. “Risk managers do not get out of bed thinking about their property policy or their liability policy,” he said. “They worry about the risks to the firm’s ability to grow, to hit its numbers, and to be compliant.”
Inertia is a big threat for commercial insurers, he suggests, many of whom have gotten used to the good life without having to rethink the way they do business. “If they’re paid well and living comfortably, there’s less of an incentive to change,” adds Buckle.
Moving quicker is an important challenge, he explains, to capitalise on value-adding opportunities. “I don’t have to go far to find a client who has had a significant issue that we have helped them navigate,” said Buckle. “I don’t worry about our ability to add value, but I do worry about the ability to move quickly to deliver really relevant solutions for clients.”
Buckle joined RSA in February this year after several years at rival carrier Swiss Re Corporate Solutions. He brings with him an analytics-driven and tailored approach to working with clients.
“My role is very much to rethink what we do and how we do it at Global Risk Solutions, from the proposition into the market, to the organisation and strategy to deliver that proposition, and the internal and external data sources we can leverage to better serve customers,” said Buckle.
He thinks commercial lines can learn much from personal lines business, such as telematics, as well as other examples of consumer-focused technology, in its interaction with corporate customers. A big development for Buckle has been the introduction of the insurer’s new RSAred software, which tries to approach risk transfer from the client’s perspective. The system to give risk managers more transparency.
“It’s a nice feature, and it tries to come at things from the client’s angle,” Buckle added. “Risk managers can download the analysis we’re using to put those in their own internal reports.”