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Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.

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Exciting Times for Marine Insurers Who Can Manage Complexity

The marine market is primed for expansion, with billions pointed toward U.S. infrastructure improvements.
By: | August 31, 2015 • 5 min read
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Multiline marine insurers are looking at exciting times within the next five years.

Driven by emerging trends in the global economy, especially in Latin America, and an expected boom in investments devoted to much-needed domestic U.S. infrastructure improvements, the marine market is primed for expansion.

However, cautions Jeanne Jankowski, head of Energy and Marine at Zurich Global Corporate in North America, only carriers who can handle complexity should be able to deliver a complete package to clients looking to take advantage of these emerging economic growth opportunities.

Jankowski said from a cargo standpoint, there are critical risk challenges surrounding freight security in fast-growing economies, in locations such as Mexico, Argentina, Venezuela and Brazil, which demand the resources and expertise to help clients maintain supply chain integrity and avoid costly losses.

Theft: A Serious Supply Chain Threat

San Francisco-based David Fowler, senior vice president at Zurich Energy and Marine, said if you look at Latin America, specifically Mexico and Brazil, you’ve got some very focused hot spots where there’s significant cargo theft happening. In Mexico, it’s Puebla, Vera Cruz and Guanajuato. In Brazil, it’s the states of Sao Paolo and Rio de Janeiro.

“The commodities most at risk are food and beverage, but when you look at the big dollar amounts of what’s being stolen, the commodity mix changes to communication devices, high-tech products, and pharmaceuticals,” Fowler said.

To combat that trend, insurance providers like Zurich, who have invested heavily in both global capabilities including global risk engineering, enjoy a tremendous opportunity to show value — mainly by working with clients to instill best practices for cargo protection against hijacking, Fowler said. That would include everything from front-loaded GPS devices for constant monitoring, to driver training, route planning and daylight hours of transit, to trucker and driver verifications.

Zurich_SponsoredContentIt’s about specialization because it’s a niche business and not everyone understands it.
— Jeanne Jankowski, head of Energy and Marine at Zurich Global Corporate in North America

Fowler explained that, traditionally, GPS monitoring devices would be loaded into containers or truck trailers. Naturally, that means the security team monitoring the cargo would only be able to locate the trailer or the container post-theft or hijacking.

“An empty container isn’t worth very much,” Fowler said. “At that point, the goods have already been stolen, transported and sold elsewhere.”

Instead, a smarter risk engineering approach is to use GPS devices embedded within the cargo itself. It’s more expensive, he noted, but much more effective in tracking down stolen goods.

Another trend emerging in the U.S. and expected to surface in other locations is called fictitious pickup, wherein phony trucking firms fabricated online will show up at a warehouse or dock with what looks to be totally appropriate documents for picking up a load of cargo. But they are not who they say they are.

“We are talking sophisticated gangs focusing on cargo theft,” he said. “They keep an eye on high-value cargoes. We expect the fictitious pickup trend will be exported outside the U.S. eventually.”

For Zurich, those challenges and others mean deploying its army of more than 900 global risk engineers in foreign locations who work very closely with clients and subsidiaries of clients, devising effective strategies to help protect cargo.

 

Infrastructure Rising: More Opportunities, Challenges

Hull and liability are also creating buzz within the multiline marine marketplace. Mainly, Jankowski said, there is a great opportunity for growth surrounding infrastructure improvement and upgrade projects that are either happening now or will unfold over the next few years within North America.

In fact, the American Society of Civil Engineers estimates that there will be $3.6 trillion in investments needed in infrastructure by 2020 in the U.S. alone.1 Much of that investment will involve port expansion projects, bridge and tunnel projects, inland waterway dredging, levee construction and repair, and power generation.

“It has to be done for our economy to remain competitive,” Fowler said.

With economic opportunity comes risk, mainly contractors facing multiple liabilities — from heavy lift vessels, vessel liability, stevedoring and wharf operations. Many of the contractors also charter equipment so there’s charterers’ liability to consider.

“All of these situations call for comprehensive, layered insurance solutions,” he said.

Most of all, civil contractors need an insurance provider who understands these risks and has solutions available, both from a coverage standpoint as well as a risk engineering standpoint. And if a carrier has a significant presence in the non-marine construction arena as well, even better coverages can be tailored to combine with existing insurance programs.

“It dovetails the two coverage arenas to give a seamless solution to the client,” he said.

From a hull and liability standpoint, America’s much needed upgrading of infrastructure creates the need for creative solutions involving overlapping coverages and risks.

“In both of those scenarios, complexity means it’s critical that you have a dedicated practice with people that truly understand the business — from a brokerage, claims, risk engineering and underwriting perspective,” Jankowski explained. “It’s about specialization because it’s a niche business and not everyone understands it.”

Looking ahead, Zurich will be rolling out an inland marine domestic logistics product later this year. Fowler described it as a holistic solution for freight forwarders and domestic logistics providers, as it combines the coverages of motor truck cargo, warehouse legal liability and bailee liability.

Fowler said traditionally those covers are bought independently, so coverage gaps can be created in trying to piece together three or four different policies. With this product, Zurich is providing a single policy with one set of limits, on a package basis, but can be offered on a monoline basis as well.

From global expansion to massive infrastructure projects and increasing transportation and related liability challenges, the marine business is in for some true excitement in the next five years. For insureds looking to compete and avoid the risks that come with the economic rewards, it means depending on a marine insurance carrier who has the right coverage programs, risk engineering solutions, claims services and underwriting flexibility and expertise to meet those challenges.

“The world is complex. It’s changing, constantly evolving,” Jankowski said. “That’s why it takes both serious dedication and the right professional teams.” “Most of all, it requires a carrier that can take a holistic view of the overall situation and share information and really work with brokers and customers to get the best possible solution.”

——————–

1American Society of Civil Engineers Website: www.asce.org. July 2015.

This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informational purposes. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company, 1400 American Lane, Schaumburg, IL 60196. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers. Risk engineering services are provided by The Zurich Services Corporation.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Zurich. The editorial staff of Risk & Insurance had no role in its preparation.




Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.
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Managing Growing International Motor Programs

The motor fleet segment is seeing expansion, bringing with it a new set of exposures.
By: | November 3, 2014 • 6 min read
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As U.S.-based companies expand operations abroad and leverage new markets and growth opportunities in the global economic landscape, the need to move products or deliver services in multiple countries will often correspond with the need to find solutions to complex international motor fleet exposures.

Whether operating passenger vehicles, delivery trucks, long-haul trucks or heavy commercial vehicles, U.S. multinationals are indeed expanding motor fleets deployed overseas. And where there are vehicles, there will be fleet exposures as well as the need for proven, controlled international casualty motor fleet insurance solutions.

“This particular segment is a significant international growth area,” said Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America. “Most of our Fortune 500 clients already have or are expanding international operations, meaning that they are also expanding a host of casualty exposures, including motor fleet liability. So it’s important that they have a relationship with an insurance carrier that has the global scope and local capabilities to be able to accommodate these growing customer needs.”

Boyk explained that all international casualty motor fleet program components — including policy terms and conditions, premium allocations, risk engineering services, claims procedures and other essential components — must comply with all relevant local insurance regulations and tax laws, factors that can vary from country to country.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements,” Boyk said. “Our primary objective at Zurich is to take the complexity out of the implementation of international motor programs.”

In fact, Boyk added that many potential customers see international motor exposures as risks they don’t want to tackle under a master program. Instead, they may trust country managers to place these policies locally. While that may seem to be the most expedient approach, it fails to provide the customer with the centralization and control necessary to ensure consistent pricing and program management. In addition, allowing local contacts to place motor coverages themselves can leave potentially serious gaps in coverage, compliance, or both.

“International motor programs can be complicated, time consuming to manage, and deal with a myriad of tax and regulatory requirements.”
— Larry Boyk, head of International Programs, Casualty, Zurich Global Corporate in North America

“The insurance regulations and tax guidelines governing motor fleet and other lines of business will differ on a country-by-country basis,” Boyk said. “If coverages are placed with markets that are not up to speed with local requirements, there could be issues once a claim occurs. Also, buying coverage on a local basis could result in doing business with a local provider whose claims handling, risk engineering, or financial resources may not be up to par.”

According to Andrew Smith, International Programs Regional Manager, Casualty, Zurich Global Corporate in North America, Zurich has established itself as a leading player in the international motor program segment as its book of business has expanded.

“International motor can be difficult to do well and Zurich is one of the markets that is recognized for our global capabilities in meeting complex multinational needs,” Smith said. “We offer risk managers a value proposition that we believe is a major marketplace differentiator.”

Smith added that controlled motor programs provided by a single carrier are relatively recent phenomena, offering significant benefits such as ease of doing business.

“With Zurich, customers get consistency of pricing and coverage from a single carrier with demonstrated financial stability and global presence,” he said. “That is, as opposed to local managers purchasing local policies from several carriers, whereby risk managers may not know the local insurer’s ratings, stability, etc.”

Also, a controlled international motor program offers the customer consolidated loss data, policy and invoice tracking, as well as confirmation of premium payment. A controlled program also provides a single underwriting point of contact through which stewardship meetings, renewal strategy meetings and negotiations with the risk manager can take place.

Smith explained that international casualty motor fleet programs feature many “moving parts,” including various risk managers or country managers, or may have no local management at all. In addition to the possibility of multiple brokers, there could be leasing companies using different coverage methods, which means a lot of different individuals with existing broker and carrier relationships.

“It can be very tough to move those countries into the program,” he said.

Boyk noted that global brokers trying to bring multiple countries into a single controlled program can face challenges when trying to work with local brokers.

“In some of these situations, brokers handling the controlled motor programs can have difficulty getting the information they need on local policies,” he said. “This can be especially true when we are talking about very large, multinational fleets. Brokers and customers need a carrier with the infrastructure to handle a potential influx of claims. The broker and customer will also want to improve program performance, so we give them the necessary risk engineering support.”

Boyk points out that few markets have Zurich’s breadth of capabilities for casualty motor coverages. Headquartered in Switzerland with major operations located around the globe, Zurich insures millions of fleet vehicles worldwide. In addition, Zurich offers thousands of claims professionals and more than 900 risk engineers around the world, all of whom share information and risk insights with clients one on one and through symposiums, such as one recently held in Cameroon.

“We distinguish ourselves through our service and our network,” Boyk said. “When a risk manager looks at auto expenses on a global basis, he or she knows it can be costly. So when we deliver a fleet program, we can offer local and centralized service coordination as well as aggregated customer data as a value-added piece helpful in benchmarking and assessing program performance.”

In fact, Zurich’s innovative technology tools include a new web-based system empowering risk managers to access not only motor loss data, but also risk engineering data, safe driving information, local policies, local invoices, and local country tax and compliance information.

Boyk noted that complexity is a hallmark of international motor fleet coverage. In fact, motor coverage can be a constantly moving target from a compliance standpoint. Hence, Zurich closely monitors evolving local regulations with specialized attorneys to provide greater certainty to customers that their international motor programs will be compliant.

“No corporation wants to make headlines for violating regulations or tax laws,” Boyk said. “We offer an array of resources and tools — we call it Zurich’s Multinational Insurance Application — that can be effectively used on a country-by-country basis to stay on top of evolving insurance regulations and tax laws.”

Ultimately, given the sophisticated data tools, claims, and risk engineering services Zurich provides, risk managers can make significant progress in learning where motor losses are coming from, what can be done to improve loss frequency and severity, and how to produce sustainable, positive results in a particular country or geographic region.

Learn more about Zurich’s International Casualty Motor Solutions at zurichna.com.

Larry Boyk can be reached at [email protected].

This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informational purposes. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Zurich. The editorial staff of Risk & Insurance had no role in its preparation.

Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.
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Zurich’s Focus on Total Cost of Risk Sets It Apart

Zurich's expertise speeds up the identification of insights for risk management departments.
By: | September 15, 2014 • 6 min read
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Some business risk is easy to control, but much risk is difficult to predict. When it comes to casualty risk exposures, smart risk management organizations follow a “big picture” philosophy to reduce that difficulty.

Most of all, they pay close attention to the concept of Total Cost of Risk, or TCOR.

With that in mind, Zurich Global Corporate in North America (GCiNA) has effectively built its Domestic Casualty value proposition on the principle that nothing truly supersedes the calculation of TCOR as a means to reduce both premium and claim costs.

And, said Brandon Fick, head of Domestic Casualty, Zurich GCiNA, Zurich leads the casualty industry because it not only offers a TCOR proposition as a prime benefit to insureds, it also puts skin in the game to back up its TCOR beliefs.

“TCOR is a major focus at Zurich because it can be a clear differentiator,” Fick said. “There are very few companies who can match our offerings regarding TCOR. Our customers are not just buying insurance; they are also buying Zurich’s expertise as an extension of their risk management department.”

Fick explained that in the large corporate business casualty market, companies typically take on the majority of the risk themselves through large deductibles and retention programs. Of course, they also buy insurance coverages for added protections. But in the very competitive casualty business, the drive for better ways to manage risk — all the factors that go into determining TCOR on an insurance program —are often pushed aside for the sake of price. That’s a very shortsighted approach, Fick said.

Fick said Zurich’s decision to focus on TCOR makes sense because it leads to high business retention and creates a strong customer-carrier interaction that ultimately results in keeping losses and costs down.

“We are always looking to help our customers drive a better outcome,” Fick said, adding that Zurich initially takes a holistic, 360-degree look at pre- and post-loss activity to see if a business is getting the most for its risk management dollar. “We offer data insights through sophisticated tools that can measure results and identify opportunities to improve.”

SponsoredContent_Zurich“TCOR is a major focus at Zurich because it can be a clear differentiator. There are very few companies who can match our offerings regarding TCOR. Our customers are not just buying insurance; they are also buying Zurich’s expertise as an extension of their risk management department.”
— Brandon Fick, head of Domestic Casualty, Zurich GCiNA

Once Zurich performs that initial analysis, the company’s claims and risk engineering team jointly creates a detailed plan that will go a long way towards reducing both claim frequency and severity.

According to Fick, the Zurich differentiator lies in its extensive — and proprietary — tool kit, which has been years in the making.

In fact, about five years ago, a prospective customer was feeling some pressure in their program and was looking for a carrier that could help them identify areas that needed improvement. Zurich specifically drilled down into the customer’s transactional outcomes by using an internal tool to identify any potential missed financial opportunities through overpayment of claims. The result was a substantial savings of 20 percent that Zurich was confident they could deliver. When they told the client about their findings, the response was, “Prove it.”

So Zurich Casualty discussed the results in detail with the customer and offered something unprecedented — a guarantee that its analysis would prove accurate and deferred an amount of the total premium. The basic proposal was that if Zurich’s calculations were right, Zurich would recoup the deferred amount and receive a bonus too.

“Within two years, we knew we had proven our findings,” Fick said, adding that the experience gave Zurich the confidence to expand the program. “We concluded we have this unique tool, why are we not using it nationwide?”

The basic TCOR premise is taking a “forensic” approach when auditing the claims process. And while the original concept was focused on claims alone, Zurich started looking at the pre-loss side as well, delivering accurate ROI numbers to clients when they agreed to commit to the entire TCOR process.

“Big data is the buzzword today; everyone in the industry is talking about it,” he said. “We’re actually taking big data and using it to create a tailored solution for the customer.”

Zurich’s underwriting team has the company so confident, Fick said, in the impact their TCOR proposition will have on driving better outcomes. Their belief is so strong that they empower their underwriting teams to offer up front premium considerations that are normally afforded later in the relationship.

“Again, we want our customers to think of us as an extension of their risk department,” he said. ”I have yet to meet a risk manager who has commented about being overstaffed. Our customers realize they need partners; most of them don’t have the resources or tools to do an in-depth analysis of their results to identify where they may have some pressure in their program.”

Fick noted that Zurich Casualty’s TCOR approach is not for every customer. It really is set up specifically for customers who are dedicated to continuous improvement and are already using some form of analytics to help in decision making. They also must share Zurich’s belief in the value in collaboration and demonstrate the commitment to execute on Zurich’s TCOR recommendations.

“It’s a 6 to 12 month life cycle,” Fick said. “Before we even look at a number on a piece of paper it requires having a lot of detailed discussions with the customer so that we can understand what they have done to manage their risk.”

Zurich formally rolled out its complete TCOR core strategy during the first quarter of 2014. But, Fick said, the company has been implementing elements of the final product during the past three years. It started out on the claims side, but today covers every aspect of risk. Since it began using its TCOR strategy with clients in 2010, Zurich Casualty has increased its new business writings 270 percent — an impressive showing by any measure.

“This is the next wave of underwriting,” Fick said. “Everyone may be talking about big data, but you have to deliver insight, solutions and a differentiated product to the customer. We believe strongly that our TCOR proposition is that critical differentiator.”

This is intended as a general description of certain types of insurance and services available to qualified customers through the companies of Zurich in North America, provided solely for informational purposes. Nothing herein should be construed as a solicitation, offer, advice, recommendation, or any other service with regard to any type of insurance product underwritten by individual member companies of Zurich in North America, including Zurich American Insurance Company. Your policy is the contract that specifically and fully describes your coverage, terms and conditions. The description of the policy provisions gives a broad overview of coverages and does not revise or amend the policy. Coverages and rates are subject to individual insured meeting our underwriting qualifications and product availability in applicable states. Some coverages may be written on a nonadmitted basis through licensed surplus lines brokers.

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This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Zurich. The editorial staff of Risk & Insurance had no role in its preparation.

Zurich Insurance Group, Ltd is an insurance-based financial services provider with a global network of subsidiaries and offices in North America and Europe as well as in Asia Pacific, Latin America and other markets.
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