6 Overlooked Commercial Property Flood Risks
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Since the time it was established in 1863, Swiss Re has built a reputation as a prestigious and respected name in the insurance industry. Its rich heritage, financial strength and penchant for innovation speak for themselves. Swiss Re Corporate Solutions provides insurance products through its various insurance companies worldwide.
Swiss Re Corporate Solutions, founded in 2010, continues to build and round out that legacy of excellence with a dedicated focus on the primary insurance market.
“Swiss Re Corporate Solutions now has more than 50 offices in over 20 countries, serving large corporations with a 5 to 10 percent market share in the segments we operate in,” said Adrian Hall, the recently appointed CEO Canada & Managing Director, Swiss Re Corporate Solutions.
Corporate Solutions excels in high-end specialty business as an excess lead insurer. It has been able to accomplish such rapid and sustainable growth because of its deep level of expertise in the industries it serves, a focused distribution strategy, commitment to the claims experience, and a client-centric approach.
Now, it is working to move into primary lead positions in the middle market. To do that effectively, it will leverage its global footprint while developing regional and local market focus.
Canada is just one of several regional markets the global insurer has targeted for its growth potential.
Canada is the eighth-largest commercial insurance market in the world — and growing. According to rating agency Moody’s, the Canadian property/casualty industry is experiencing stable demand, strong underwriting discipline, and increasing competition from insurers with strong balance sheets.
The marine, financial & professional services, cyber, general liability and property markets in particular seem likely to remain competitive in 2017.
A dedicated local strategy will be critical to maximize the opportunity these markets offer.
Swiss Re Corporate Solutions Canada business currently employs about 50 people with a premium of around CAD 184 million. It writes property/casualty lines, energy, financial & professional services, marine, engineering & construction and aviation business.
“We will continue to focus on those areas but look to expand into others as well,” Hall said.
Corporate Solutions demonstrated its commitment to a localized approach by creating a separate enhanced leadership structure to operate the regional businesses and execute a more boots-on-the-ground strategy.
That’s why Corporate Solutions brought in Adrian Hall to head up the Canadian business as CEO on May 1st — a role created to reinforce Corporate Solutions’ commitment to the Canadian market and grow its presence there.
“The new role reflects Corporate Solutions’ localization strategy,” Hall said. “Part of the expansion strategy is to have a local leader responsible for the strategic, managerial and institutional matters, from a position that is closer to our clients and to ultimately proactively service our clients more effectively.”
Hall has filled many roles in the insurance industry over his 24-year, globe-trotting career.
“I’ve held a range of leadership roles over my career in a range of markets internationally from positions in a number of European markets for a couple of years, and then in South America for a few years leading our distribution strategic direction,” Hall said.
“I was then in the Middle East for five years, based in Riyadh, Saudi Arabia and then in Dubai, United Arab Emirates heading up the marketing and distribution strategy and external positioning of the company across the region. I then moved back to London for a short period of time, and I’ve been in Canada for the last 13 years where I have fulfilled a range of Commercial and Personal Insurance leadership positions.”
Hall’s global view of the insurance marketplace, combined with his firsthand knowledge and network of contacts within the Canadian market, made him a perfect fit for the new leadership role.
“I’m very much focused on that global strategic thinking while executing local delivery. We have to watch market dynamics and think proactively about where the market and clients are heading so we can ensure future sustainable success for our Clients and Swiss Re Corporate Solutions” Hall said.
Hall’s most recent prior experience as a chief customer officer aligned his strategic thinking with Swiss Re Corporate Solutions’ client-centric philosophy. That relentless client focus was one of the key differentiators that attracted Hall to the position of Canada CEO.
In addition to Hall’s leadership, a few key tenets of Swiss Re Corporate Solution’s business model and mission prime the organization for continued growth.
Not least among these is the company’s dedication to claims handling as an integral element of the proposition delivery for its clients. Corporate Solutions positions its claims team at the core of its organization, meaning it is integrated with every business unit in order to create a seamless experience for clients.
The company’s ‘Claims Commitment’ states its mission to pay covered claims within five business days, and advance payments of up to 50 percent of a loss estimate even sooner in the event of an insured first-party property loss. A member of the claims team will also contact clients within one day after a loss notification, and work with them to tailor a strategy best suited to their needs and preferences, whether that means settling or defending a claim.
“Our claims commitment is a key differentiator for us in the marketplace, and it stems from our client-centric approach,” Hall said. “We know that the way a claim is handled matters just as much as the eventual claim outcome. Creating a fast and smooth experience goes a long way in earning our customers’ trust.”
The insurer’ risk expertise also stands apart from competitors.
“At Swiss Re Corporate Solutions, we are focused on core business segments that we have a strong appetite in, and then we go deep. In the areas of property, energy, financial & professional services, aviation and engineering & construction, for example, there is deep, solid local expertise that our clients really benefit from,” Hall said.
A targeted distribution strategy also focuses on working with brokers that are aligned with Swiss Re’s philosophy and strategic thinking, which ultimately helps to build a more seamless insurance experience for clients.
Finally, financial strength and capacity also provide clients the confidence that their exposures are covered and their claims can be paid. Balance sheet strength also provides Swiss Re Corporate Solutions with the flexibility and muscle to pursue growth in promising markets and be selective in the industries and risks they take on.
To learn more, visit https://corporatesolutions.swissre.com/.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Swiss Re Corporate Solutions. The editorial staff of Risk & Insurance had no role in its preparation.
Wind energy is all grown up. It is no longer an alternative, but in some wholesale markets has set the incremental cost of generation.
As the industry has grown, turbine towers have as well. And as the older ones roll out of their warranty periods, there are more claims.
This is a bit of a pinch in a soft market, but it gives underwriters new insight into performance over time — insight not available while manufacturers were repairing or replacing components.
“There is a lot of capacity in the wind market,” said Charles Long, area senior vice president for renewable energy at broker Arthur J. Gallagher.
“The segment is still very soft. What we are not seeing is any major change in forms from the major underwriters. They still have 280-page forms. The specialty underwriters have a 48-page form. The larger carriers need to get away from a standard form with multiple endorsements and move to a form designed for wind, or solar, or storage. It is starting to become apparent to the clients that the firms have not kept up with construction or operations,” at renewable energy facilities, he said.
Third-party liability also remains competitive, Long noted.
“The traditional markets are doing liability very well. There are opportunities for us to market to multiple carriers. There is a lot of generation out there, but the bulk of the writing is by a handful of insurers.”
Broadly the market is “still softish,” said Jatin Sharma, head of business development for specialty underwriter G-Cube.
“There has been an increase in some distressed areas, but there has also been some regional firming. Our focus is very much on the technical underwriting. We are also emphasizing standardization, clean contracts. That extends to business interruption, marine transit, and other covers.”
“Gear-box maintenance has been a significant issue for a long time, and now with bigger and bigger blades, leading-edge erosion has become a big topic,” said Sharma. “Others include cracking and lightning and even catastrophic blade loss.”
Long, at Gallagher, noted that operationally, gear boxes have been getting significantly better. “Now it is blades that have become a concern,” he said. “Problems include cracking, fraying, splitting.
“In response, operators are using more sophisticated inspection techniques, including flying drones. Those reduce the amount of climbing necessary, reducing risk to personnel as well.”
Underwriters certainly like that, and it is a huge cost saver to the owners, however, “we are not yet seeing that credited in the underwriting,” said Long.
He added that insurance is playing an important role in the development of renewable energy beyond the traditional property, casualty, and liability coverages.
“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine. Weather risk coverage can be done in multiple ways, or there can be an actual put, up to a fixed portion of capacity, plus or minus 20 percent, like a collar; a straight over/under.”
As useful as those financial instruments are, the first priority is to get power into the grid. And for that, Long anticipates “aggressive forward moves around storage. Spikes into the system are not good. Grid storage is not just a way of providing power when the wind is not blowing; it also acts as a shock absorber for times when the wind blows too hard. There are ebbs and flows in wind and solar so we really need that surge capacity.”
Long noted that there are some companies that are storage only.
“That is really what the utilities are seeking. The storage company becomes, in effect, just another generator. It has its own [power purchase agreement] and its own interconnect.”
“Most projects operate at lower capacity than anticipated. But they can purchase coverage for when the wind won’t blow or the sun won’t shine.” —Charles Long, area senior vice president for renewable energy, Arthur J. Gallagher
Another trend is co-location, with wind and solar, as well as grid-storage or auxiliary generation, on the same site.
“Investors like it because it boosts internal rates of return on the equity side,” said Sharma. “But while it increases revenue, it also increases exposure. … You may have a $400 million wind farm, plus a $150 million solar array on the same substation.”
In the beginning, wind turbines did not generate much power, explained Rob Battenfield, senior vice president and head of downstream at JLT Specialty USA.
“As turbines developed, they got higher and higher, with bigger blades. They became more economically viable. There are still subsidies, and at present those subsidies drive the investment decisions.”
For example, some non-tax paying utilities are not eligible for the tax credits, so they don’t invest in new wind power. But once smaller companies or private investors have made use of the credits, the big utilities are likely to provide a ready secondary market for the builders to recoup their capital.
That structure also affects insurance. More PPAs mandate grid storage for intermittent generators such as wind and solar. State of the art for such storage is lithium-ion batteries, which have been prone to fires if damaged or if they malfunction.
“Grid storage is getting larger,” said Battenfield. “If you have variable generation you need to balance that. Most underwriters insure generation and storage together. Project leaders may need to have that because of non-recourse debt financing. On the other side, insurers may be syndicating the battery risk, but to the insured it is all together.”
“Grid storage is getting larger. If you have variable generation you need to balance that.” — Rob Battenfield, senior vice president, head of downstream, JLT Specialty USA
There has also been a mechanical and maintenance evolution along the way. “The early-generation short turbines were throwing gears all the time,” said Battenfield.
But now, he said, with fewer manufacturers in play, “the blades, gears, nacelles, and generators are much more mechanically sound and much more standardized. Carriers are more willing to write that risk.”
There is also more operational and maintenance data now as warranties roll off. Battenfield suggested that the door started to open on that data three or four years ago, but it won’t stay open forever.
“When the equipment was under warranty, it would just be repaired or replaced by the manufacturer,” he said.
“Now there’s more equipment out of warranty, there are more claims. However, if the big utilities start to aggregate wind farms, claims are likely to drop again. That is because the utilities have large retentions, often about $5 million. Claims and premiums are likely to go down for wind equipment.”
Repair costs are also dropping, said Battenfield.
“An out-of-warranty blade set replacement can cost $300,000. But if it is repairable by a third party, it could cost as little as $30,000 to have a specialist in fiberglass do it in a few days.”
As that approach becomes more prevalent, business interruption (BI) coverage comes to the fore. Battenfield stressed that it is important for owners to understand their PPA obligations, as well as BI triggers and waiting periods.
“The BI challenge can be bigger than the property loss,” said Battenfield. “It is important that coverage dovetails into the operator’s contractual obligations.” &