Risk sharing with customers – RSA on how to empower it

"In many ways, we actually encourage customers"

Risk sharing with customers – RSA on how to empower it

Insurance News

By Mia Wallace

“Alignment” and “leverage” is the name of the game for Steve Watson (pictured) and the UK specialty lines team he heads up at RSA. Now some two years on from RSA’s acquisition by Intact Financial Corporation (Intact), the team has gone from strength to strength, he said, as the group’s global specialty platform starts to pull together to better align appetites and leverage capabilities.

“For example,” he said, “where we have strong capabilities across North America in terms of things like cyber and trade credit, we’ve been looking at how to introduce those capabilities into the UK. For cyber, we’re looking to launch with our partner Resilience. And in trade credit, we’ll be looking to launch with our partner Cartan Trade. So there’s already strong evidence of how things have been developing.

“At the same time, we’re being very diligent with managing our existing portfolios and growing the business really well. And that is not just about premium volume growth, it’s also net new customer growth. We’ve been able to do that by having a really deep focus on the things that we’re good at and by not making it overly complicated but rather sticking to what we know and executing that very well.”

Key to RSA success

For Watson, the key to RSA’s success in the specialty lines space comes down to its consistency in the face of a tumultuous external environment. These are portfolios that the insurer has managed well for a long time, he said, and the focus has to be on maintaining that consistent approach to supporting and serving brokers and customers and not “flip-flopping” when it comes to the management and delivery of its portfolios. 

“Overall, we’ve been very consistent with the growth we’ve seen through our portfolios and demand continues to be very strong,” he said. “Because the reality is that the uncertainties out there aren’t getting less uncertain. Risk is becoming increasingly interconnected and increasingly complex. Where we stand is in supporting customers through that.

“And I think we’re doing a really good job of embracing risk, particularly around some of our more cat-exposed portfolios. We’re one of the markets that is continuing to support those portfolios really well at a time when we may be seeing capacity in other areas of the market going the other way.”

What has been interesting to see, however, Watson said, is how in recent months, there has been a slight increase in customers opting for increased levels of self-insurance in some areas. He noted that it’s understandable, given that customers do - and should - always monitor the availability of capacity in the market and the price of that capacity against what it will mean to take some of that risk on their own balance sheet.

“That’s always been the dynamic,” he said, “and naturally as markets harden that equation of availability versus cost shifts - and everything else happening in the market plays into it. We’re only seeing a little of that but it’s interesting to keep an eye on.”

What role do brokers play?

As trusted advisors to their clients, brokers have a clear role to play in facilitating conversations around self-insurance. That being said, Watson highlighted that customers in the areas where RSA’s specialty lines team plays tend to be more sophisticated purchasers of insurance and naturally have many of the skills and capabilities required to accurately assess their own risk profiles and appetites.

“So for us, it’s about being really transparent about how we look at risk and how we price risk,” he said. “And actually, in the kinds of lines of business we underwrite - which generally tend to have a lot more results volatility in them - in many ways, we actually encourage customers to have skin in the game, through taking an equitable share of risk as well. Because we see it as a partnership and so we actually encourage some of that risk sharing and, in many respects, we see it positively.”

Effective risk management is at the crux of how RSA supports customers looking to manage a portion of their risk for themselves. Watson highlighted RSA’s risk consulting team – led by Andy Jones – and how they work to actively support customers, whether that be through on-site surveys, ongoing risk management consultancy activities or desktop reviews.

Empowering customers to be educated about their own risk profiles and actively engage in the risk management practices that will make them a better risk is critical to creating a sustainable insurance market. And RSA’s specialty lines business is working to protect customers from genuine balance sheet shocks, he said, and is not interested in “swapping dollars for pounds” which is a zero-sum game in the areas the team is operating in.

“Where our expertise lies and what we’re good at is being able to take the risks that customers really don’t have the appetite or capacity to take on themselves,” he said. “Those are the risks that actually represent a really significant and unknown potential jolt for their balance sheets and those are the ones we can take on and manage really well.”

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