Property risk insights strengthen resilience after loss
November 1, 2016
Commercial property owners need to protect their assets, and a focus on resilience is an important way to mitigate property risks, advises Richard Montminy, Head of Property for Global Corporate, Zurich North America. In this Perspective presented by Zurich, he discusses marketplace trends and shares insights on property risk management.
This article first appeared in the November 1, 2016 issue of Risk & Insurance.
In this perspective presented by Zurich, he discusses marketplace trends and shares insights on property risk management.
What trends is Zurich seeing in 2016 in the property insurance marketplace?
The market is seeing an abundance of capacity, driven in part by the entry of new and alternative layers in commercial insurance. These include non-traditional insurers, start-ups and investors seeking new opportunities. At the same time, we are continuing to see downward pressure on property rates. In the past, we used to describe the market cycles as “soft” or “hard,” but these aren’t really coming into play anymore; it’s just the market. The marked reduction in insured catastrophe losses has also been pressuring both insurance and reinsurance rates downward. At the same time, there has been a continued flow of attritional and large losses hitting the market, including most recently the Fort McMurray wildfires in western Canada. Even though these losses appear to be putting a slight damper on rate declines, the overabundance of capacity continues to drive the market that we have been experiencing in 2015 and into 2016. The challenge that insurers will face as we look forward is that the continued drawn-out, downward pressure on rates across the property industry is creating an unhealthy market that is not sustainable over the long run.
Our Risk Engineers are equipped to help customers harden their assets against a variety of perils.Richard Montminy, Head of Property, Global Corporate, Zurich North America
How can commercial property insurers deliver value to retain profitable business in an environment of declining rates? How can you truly differentiate?
In a market where rates are declining, it can be tempting to seek the lowest price for coverage. But there are significant differences among insurance providers. At Zurich, we differentiate our value through our ability to give our customers insights to improve the resilience of their organizations. We’re constantly working with customers to build that into the infrastructure of their organizations so that they can regain their footing quickly after a loss. Zurich has more than 100 years of experience in delivering on our promises to customers in North America, and as a leading global insurance group we can help property owners manage their risks in more than 200 countries and territories. Risk insight, claims expertise, global reach, financial strength ─ these are just a few of the reasons why multinational corporations have chosen Zurich as their risk partner for many years. We provide value not just in the insurance policies we offer, but also through the insights we deliver.
How does Zurich help property customers build resilience?
Our Risk Engineers are equipped to help customers harden their assets against a variety of perils. Zurich Risk Engineers work closely with customers to build business continuity plans, and to take steps before, during and after a loss. We bring not just a catastrophic perspective or a fire perspective, but broad-based experience in mitigating a broad spectrum of risks. Our teams gain insights from working with customers in all industries, and we are able to share insights to help reduce property risks. For example, a company in the plastics industry acquired a peer with manufacturing processes somewhat different from our customer’s operations. Zurich had experience with a loss on similar exposures faced by another customer and our engineer was able to share these insights. We showed the companies where they could build protection into their processes. In another instance, we engaged with a large hospitality company to show them how to build in protection to prevent water intrusion, which causes most of the damage in hurricanes. From securing rooftop equipment with cables, to sloping balconies to encourage drainage, to the proper glazing and support structure of windows to resist projectiles and breakage, Zurich helped this customer enhance its resilience. We have shown our customers that it’s possible to retrofit buildings but generally much cheaper to incorporate the proper design upfront. Many of our large customers have used our insights to implement changes in the design phase.
How important is it for insurers to make investments that help customers build resilience?
We want our customers to expect full engagement and attention from us. Zurich continues to invest heavily in our Risk Engineering group, to deliver insights and to ensure we’re keeping up with changes in building and industry standards. Our teams have been through catastrophe events many times and we are able to advise customers on what they need to do in the first hour, the first week and month, etc., when a loss occurs. Zurich’s relationships with vendors enable us to help customers plan for generators and fuel, for example. We are making investments to strengthen our ability to help our customers think about and plan for resilience and recovery.