Mike Hammond, the CEO of Jardine Lloyd Thompson Risk Solutions Ltd., told delegates at a conference in Lugano, Switzerland, that the “insurance industry must invest in the necessary technical skills if it is to achieve the efficiencies in the process and bespoke solutions demanded by major corporations.”
Speaking to an audience of risk managers, insurers and reinsurers in the global telecoms, media and electronics sectors at “The Extreme Communications Environment ” Conference, Hammond also warned that if the London Market failed to reform itself by becoming more transparent in all of its processes, and not simply broker remuneration, regulators would most likely intervene.
“Investment in the resources and technical skills required today will eventually achieve lower costs in the future, as greater clarity and understanding of the specific risks faced by the telecoms, media and electronics industries will lead to fewer disputes and allow insurers and reinsurers to meet the expectations of clients,” Hammond continued.
“At JLT we are adopting a more discerning attitude to those areas of business in which we participate and we are investing in technical resources to meet what we perceive to be the future demands of our clients and the insurance industry, in general,” Hammond added.
Andrew Cornish, the Head of Insurable Risk at UK utility Centrica plc and chairman of the UK’s Association of Insurance and Risk Managers, noted that recent changes in the industry brought about by the New York Attorney General Eliot Spitzer’s investigation were a “once in a generation opportunity” to change the industry for the better. “There are many challenges in the risk management world and in 2005 we must grab these challenges and change the market. That will only happen if insurance buyers, brokers and insurers work together to find solutions,” he stressed.
The conference also heard from a number of speakers who noted that “bespoke solutions,” specifically addressing the current and emerging risk issues of the communications, media and electronics industries are possible in today’s market place. However, having the necessary technical skills and depth of resources in both brokers and underwriters to build trust and confidence in the understanding of the risk profile of clients is crucial.
Esa Kaunistola, the senior legal counsel for Nokia Corporation, said that insurers needed to better understand their customers. “They need to underwrite the whole risk portfolio not just line by line. There should also be stability on pricing and global solutions for global companies.”
Kaunistola added that from a personal perspective he had been extremely encouraged by the recent commitment that Nokia had received in designing a bespoke program for the risks they face. “The environment to achieve longer term commitment is improving,” he noted.
Chris Brett, the Group Risk Manager of UK media group, Daily Mail & General Trust plc stated that the “extremely archaic practices” prevalent in the insurance industry were a challenge to all those involved. “We might be prepared to pay more for our insurance simply to get more certainty into the process. We have a real issue with contract certainty and we don’t see why we should pay insurers if we do not receive documentation.”
Peter Hacker, Partner, JLT Risk Solutions and Global Head of the Communications and Technology Practice Group commented: “Insurers, risk advisors and corporates will need to focus more intensely on the entire risk landscape than they have in the past. This will lead to a shift towards more streamlined services and innovative risk financing solutions that really do meet the needs of global clients.”
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