AL: Can the insurers come up with the contingent business interruption cover the customers want as made clear by this year’s survey?

NB: As an insurer you cannot put your head in the sand and not look for solutions for clients. If they need cover we should seek to provide it because they need solutions. The challenge is gathering the information and data. The answer is: ‘Yes we can do this but we want quality information to do so.’ Otherwise you are just putting your finger up in the air and taking a guess. Therefore if the clients can come up with better information they should be able to obtain better and potentially cost effective cover.

AL: Is there a problem with claims currently? This was a big topic of conversation at the recent Airmic conference and risk managers who took part in the survey are very keen to try and clarify coverage issues before claims hit rather than argue it in the courts afterwards. Why haven't risk managers, brokers and insurers got together to really thrash out the coverage and do stress tests and the like before?

NB: The reality is that everyone is so busy nowadays that to a certain extent they just do not have the time and this kind of activity can be viewed as a nice to have. We do hold claims seminars with clients. Everyone always comes away saying what a good discussion that was and the policy may be tweaked and the client has a better understanding of what we believe the cover is all about and what is excluded. So it is a really good experience and the answer is that we should do it more often. If the Airmic members say we want to do more of this there will be no push back from us. My other comment would be that when you have lawyers involved it is more likely to escalate and there is less chance of coming to an amicable solution at speed. I have to say that, if it is a big number claim, then the clients will invariably seek guidance from a law firm or in-house counsel about the particular pressure points and that is the reality of where we are. The key is the lawyers shouldn’t drive the conversation. It needs to be driven by the client and the insurer and the broker. If there are challenges to sort out, get around a table and talk about it. Often the case is not black and white because the coverage is wide and there are different circumstances that were not anticipated by any parties so it needs to be discussed.

AL: One of the problems on this topic, as stated at many of the Risk Frontiers roundtables over the years, is that you and the brokers are not consistent enough. You win the account and then the experienced person moves on and leaves them with an inexperienced person who they don't know. Is this fair?

NB: People are key. This comes back to my role and the role of the team and relationship management. If an underwriter moves on then you have to find the right replacement to ensure continuity of that relationship at some point within the organisation. We are very respectful of the fact that in corporate insurance you should ideally work with clients and with brokers in a tripartite relationship. Underwriters are by nature sceptical and the more information they have and see of the client, that trust factor can only increase. There is no downside to meeting the client.

AL: Do you think that there is a structural change required in the insurance industry because of the pace of change and need for more immediate solutions to complex problems? Are the old lines of business outdated and holding back the industry and clients?

NB: The answer is to find intelligent people, underwriters and background staff who can understand the changes in the industry such as supply chain, and anticipate risk and do proper analysis. This gives you a real competitive advantage. To do this you need the right tools, people and technology. That is what differentiates you from the competition. The naïve market can rely on the leader and follow what they do that is the nature of the subscription market. But naïve capacity will eventually be found out in such a fast changing world and hopefully XL will have a competitive advantage because we are obviously one of the stronger companies because we have invested in the resource to support this market, such as superior talent and technology.

AL: Do you think the brokers are increasingly in a difficult position because they are working for and paid for by both insurers and customers? Do you think the EC needs to revisit the question of broker remuneration as they will under revision of the Insurance Mediation Directive (IMD)? Do they have to change the model to survive and become truly fee-only advisers to risk managers?

NB: The brokers always work for their clients. Brokers are great survivors and are very creative in terms of how they do that. It is in their DNA. They do tend to work for a fee for the larger risk managers and the clients will have a view as to how that is paid and shared. The insurance industry is changing the world over and the brokers will look to get more revenue from more services. In reality there are more checks in place than there were in the 1970s and the FSA is more heavily involved in the safeguard of industry practices which should be a comfort for all.

- The full UK Risk Frontiers part of this year’s survey is published in the July/August hard copy Commercial Risk Europe newspaper.

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