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Bring on tomorrow: Four questions for which every risk manager should expect an answer

Source: Asia Insurance Review | Apr 2014

A risk manager should ask his insurer four pertinent questions of which his insurer must have great answers for them, says Mr Rudi H Spaan of AIG APAC Holdings Pte Ltd. 
 
Recently I bought a new games console for the kids. When I tried to plug it into my much-loved old TV, I discovered a mess of cabling round the back of the unit, and not a single spare port. It was time to get a new model of television. 
For the kids, of course.
 
By the time I’d reached the shop, I knew at least as much about televisions as the shop assistant. I had checked review sites, considered what was important to me (many HDMI ports) and narrowed my shortlist to two specific models. Even the shop I visited was pre-selected: it had both models in the shop and a decent post-sales service offering. All that remained was for me to make a final decision and agree on a price.
 
The mundane act of buying a TV has been changed by the advent of the internet. Entirely new capabilities are demanded of the shop assistants, the TV manufacturers, and perhaps most surprisingly, the shoppers themselves. The three parties are now equal participants in a dynamic conversation. Few buyers today are bamboozled by technical language in the way that perhaps I was when I last bought a TV. Today, phrases like “4K Ultra HD”, “HDMI” and “SMART TV” are all but common currency.
 
Informed customers is a good thing
In many ways, a consumer’s role has professionalised, closely mirroring the behaviour of a modern commercial buyer in their business role. And the result? Better decisions. Fewer unwelcome surprises. Less mystifying language.
Unsurprisingly, it turns out, having informed customers is a good thing, particularly for the customers themselves.
 
I believe that having better informed buyers is, without a doubt, better for all the participants in an industry: buyer, seller, manufacturer. Over a short period of time it may suit one party to keep ‘their’ knowledge shrouded in mystery. But for the long-term health and growth of a whole industry, all participants should have access to information.
 
What excites me more than anything else in our industry, in this region, is that our buyers – risk managers – are rapidly building in number and capability. PARIMA, the Pan-Asia Risk Management Association, is growing in scale and influence, with its first members’ conference scheduled for late 2014. Interest and participation in RIMS Australia is booming. 
 
My colleagues in AIG’s distribution and underwriting teams confirm, albeit non-empirically, that our customers, in partnership with their brokers, are becoming better informed, and more challenging. For the long term health and growth of the insurance industry, this is without a doubt a good thing. 
 
To help promote and extend this growth in capability and impact, I would like to propose four questions that risk managers should be asking of their current and potential carriers.
 
“How can I use your work to demonstrate the value of risk management in my company?”
 Your carrier should be relied upon to provide value-adding services and information that, frankly, makes you look good. Their analyses and charts should be readily available to you to present your case to your senior management team. You should be able to rely on them for simple-to-use analytical tools, programme design tools, online resource centres, and cost of risk analyses. 
 
“How do you help make me a better professional?”
Whether or not you are enrolled in a formal continual professional development (CPD) process, you need to keep your skills up and your network of risk managers healthy. Your carrier should be offering you clear opportunities to develop, whether by focusing on pre-emptive risk engineering or knowledge of particular lines of business. 
 
Training and coaching should be something that you can expect to be delivered, at a high standard of expertise and frequency from your suppliers. With so many carriers claiming expertise and thought leadership, you should be benefiting from their knowledge to develop your own career. 
 
“What happens in 20 years when we need to make a claim?”
My previous television lasted me well over 10 years, and I am sure the same will be true of my new unit. Commercial insurance covers may be called on to protect you and your company next year or, in the case of some liability covers – in 20 years’ time. You need to be confident that the decision you take today – with all today’s pressures and priorities – will stand up in 20 years’ time. 
 
“Why shouldn’t I simply pick the lowest premium?”
Simply put, if your carriers cannot answer this question to your satisfaction, by all means buy the cheapest policy you can find. If the carrier cannot explain what makes them so special as to deserve a high price, then they do not deserve it. 
 
Clarity of view
When I chose my new television, I knew what was important to me, and what I was willing to pay for (42” not 50”; LED not plasma; HDTV not 3DTV). You should have the same clarity when talking to your carriers. What is it that you value? Is it lowest premium? Lowest total cost of risk? Broadest level of cover? Highest limits? Best international network? Best engineering and risk management services? Deep Claims understanding for your industry? Tailored coverage? Brand reputation? 
 
As the risk manager for your company, this clarity of view is arguably the areas in which you can add the greatest value to – your business. Anyone can buy the cheapest cover on offer. A risk management professional, however, creates the right risk management programme for the business, at the right price, with the right protections in place, from the right carriers. 
 
Great answers to questions above
Here at AIG, I am proud to say that I believe we can give you great answers to every one of the questions listed above. More than that, I know that we are developing better answers all the time. I know this as Head of our Broker and Client Management unit for Asia Pacific, a role almost purpose-built to answer these questions, and similar ones from customers and from brokers. 
 
In AIG we are serious about customer-centricity and delivering value to our broking partners. We have launched a raft of analytical and descriptive tools for our customers, from AIG Multinational’s tablet-based Program Design Tool to NOVI, our unique service created to help customers estimate their exposure to food-based product recalls.
 
Unbeatable value proposition
Across Asia Pacific, starting in Singapore on 28th February 2014 at the AIR Broker Summit, we will be rolling out our Broker Academy. Towards the end of 2014 we will be extending our training to engage directly with risk managers. More fundamentally, perhaps, we are one of the founding sponsors for PARIMA, and we will be investing our resources to benefit them and their members through 2014 and beyond. Ultimately, we believe that insurance is most valuable to our customers when it is bought, not sold. We need strong, thoughtful risk management professionals to help us become better at what we do.
 
After over 95 years of serving our customers and distribution partners, they know that we will stick with them over the long run regardless of the challenges or difficulties of the day. AIG is proud to be one of the strongest financial institutions in the world, with the capital strength, financial rating and global network to be able to serve our clients wherever they operate. 
 
Finally, I believe that AIG differentiates itself in the value that we bring to our customers. The integrated package that we offer – world-class expertise, innovative products, highest claim limits, breadth of cover, claims protocols, controlled master programmes – combines to create an unbeatable value proposition for our customers, and one that we know our brokers are proud to be able to offer.
Bring on tomorrow.
 
Mr Rudi H Spaan is Head of Brokerage Distribution and Client management, AIG APAC Holdings Pte Ltd.

 

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