Brokers must take centre stage for risk management - Allianz

Speaking to Insurance Times, Neil Clutterbuck, chief underwriting officer at Allianz, said brokers have the opportunity to deliver added value to customers by driving home the benefits of risk management.

In its third quarter results statement, Allianz highlighted the impact of rising claims costs on the back of a one in ten loss year for large losses on commercial property.

The report stated that both customers and brokers can play a part in helping management costs by being “vigorously focused on risk management”.

This is a sentiment that Clutterbuck supports. “We have a team of 45 risk surveyors in our commercial team that are there to support brokers and clients,” he added. “We are continuing to invest in our risk management staff and the technology that supports them.

“Brokers have a significant role to play in the industry’s efforts to enhance the focus on risk management by our customers.”

Risks in a post-Brexit world

Clutterbuck said the past year had been tough in the small to medium-sized enterprises (SME) sector; uncertainty over Brexit and its possible impact had left many looking at how they could plot a course though the challenges created.

“You only have to look at the strain that UK mid-cap plc has been placed under in terms of funding,” he said.

Clutterbuck added that many firms had sought to take out additional funding after warnings over the need for stockpiling in the run up to the UK’s proposed departure from the European Union (EU) on 31 March this year.

“They were faced with the issues over the pressure that Brexit may or may not have placed on the supply chain and were, therefore, faced with decisions as to whether to stockpile supplies in case there were problems with the delivery of goods and products in the immediate aftermath of the UK’s withdrawal,” he explained.

“If  UK plc took an estimated £4bn in loans to manage the potential impact, it creates a dilemma. Do you use the money to stockpile goods or protect the wages of your employees?”

Clutterbuck said the current claims trends and ongoing uncertainty in the economy had enhanced the role of the broker.

“I think the importance of brokers to their clients is as high as I can ever remember it in my 30 year career,” he added.

The insurer’s academy system had focused on the areas of loss and risk control. “Those lessons have to be shared across the underwriting and wider insurance community,” he said.

“There is an opportunity for brokers that have been performing the role [of] de facto risks managers for some of their clients, and the need for that role is becoming ever more apparent.

“It is really vital that the customer understands their risks and the steps they need to take to limit those risks and find effective cover for those they cannot effectively manage.”

Data-driven

Looking to the year ahead, Clutterbuck believes that 2020 will be defined by the industry’s efforts to more effectively use data.

“For underwriters, I think it is in the context of how we harness the data available and grow the skills to do that both effectively and appropriately,” he explained.

Allianz has partnered with a leading university to create a masters course in data science and Clutterbuck believes that the use of data is a question for every aspect of the insurer’s operations.

“I have set the target to be a market leading data organisation in the terms of the way we use the data we have access to,” said Clutterbuck.

He added that the industry has been looking at how it can utilise ‘big data’ for some years, but that the time had come for insurers to understand how it can be effectively implemented both in the understanding and pricing of risk.

He noted that the market was now challenged by new risks in the shape of man-made risks, such as cyber, and the increasing frequency and severity of natural perils, for example windstorms and floods, particularly for the UK.

The ability to understand risks and use data to identify the threats faced by the policyholder could give rise to the industry becoming fully aware that property would flood and, as such, pose a question as to whether it could be insured for a peril which could no longer be described as “unforeseen”.

“Floodplains are increasingly used for building as the land is cheaper,” said Clutterbuck. “As an industry, [we] should not be looking to refuse cover but rather use the data we have to understand the scale of the threat and ensure that there are risk management strategies in place to protect against that threat.

”If it is flooding, for instance, we need to understand the likely level of the flooding when it occurs and ensure that the property is protected against the likely scale of the event.”