Zurich

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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Working Together to Manage Energy Risks

Having a true risk management collaboration with an insurer will prove increasingly valuable as challenging market conditions persist.
By: | August 31, 2016 • 5 min read

The energy sector is high stakes. For oil and gas, petrochemical and power generation companies, every risk is amplified by the sheer number of people reliant on its services.

“In most industries, if property damage is suffered, finding ways to continue production or sales may be relatively easy, and the effects on customers are minimal. If a power plant goes down however, it could leave millions of people without power. The stakes are much higher,” said Joe Tinetti, head of U.S. energy property and marine, Zurich Global Corporate in North America (GCiNA).

Insurers face their own challenges in this industry — the perfect storm of overcapitalization, an influx of new carriers and pressure to grow portfolios and results at a time of reductions in available premium income.

At the same time, risk managers in the energy sector face pressure from the C-suite to cut expenses as the organization deals with the challenge of falling oil prices.

“This situation creates an imbalance between supply and demand that perpetuates soft market conditions,” Tinetti said.

“The risk management departments at energy companies are already running lean, even at Fortune 100 companies,” said Jeanne Jankowski, head of energy and marine at Zurich GCiNA. “As insurers, we have to listen to what risk managers’ needs are so we can tailor solutions that reduce their total cost of risk.”

Zurich_perspectives_090116“If a power plant goes down however, it could leave millions of people without power. The stakes are much higher.”

– Joe Tinetti, head of U.S. energy property and marine, Zurich Global Corporate in North America

 

Crafting a Collaborative Solution

With such high stakes and challenges on both sides of the risk management equation, energy companies need an insurer with a long history in the business, with the experience and expertise to enable a true partnership.

“While new players enter and exit the market, Zurich has been very consistent,” Jankowski said. “We have had a dedicated energy practice in North America for over 25 years. Since many energy companies have international exposures, we are able to provide access to one of the largest global networks in the insurance industry, reaching more than 200 countries and territories around the world.”

Zurich’s risk engineering and claims teams also come with decades of experience among them.

On average, each of Zurich’s risk engineers brings a minimum of 15 years of industry experience to the table. These engineers, along with underwriters and claims professionals, collaborate with risk managers and brokers to gain an understanding of the specific risks they face and the type of solutions they need.

“Every team member knows the client, because underwriters, risk engineers and claims professionals all have a different perspective of the risk,” Jankowski said. “Working together, they can develop the best solution to help the customer address them cost-effectively. Our underwriters know our customers and our risk engineers understand how to help them identify and mitigate risk. By collaborating on behalf of our clients, we can build holistic solutions that include insurance and other effective risk mitigation strategies.”

Facility maintenance and safety are two top priorities for risk managers in the energy industry, but it can be difficult to prioritize the budget. Should more dollars go to safety training, or to the upkeep of a slightly aging processing plant?

Risk management often has to fight for its share of the budget — a challenge that risk engineers and underwriters can address by developing cost-effective programs and by crafting creative ways to present them to senior management.

“One top concern for risk managers is the price of risk transfer, so we help them develop solutions to mitigate costs while also managing the maintenance and improvement of their facilities,” Tinetti said. “We help them determine where to allocate their resources. When you prioritize maintenance, you mitigate future loss costs.”

Zurich_perspectives_090116“Our underwriters know our customers and our risk engineers understand how to help them identify and mitigate risk. By collaborating on behalf of our clients, we can build holistic solutions that include insurance and other effective risk mitigation strategies.”
– Jeanne Jankowski, head of energy and marine, Zurich Global Corporate in North America

The Importance of Relationships

Zurich reinforces its integrated and holistic approach through its annual stewardship meetings, which bring together insureds, brokers, underwriters, claims managers and risk engineers.

Not only do these meetings offer an opportunity to engage with customers and deepen relationships, they also serve as a “mid-year assessment” to help Zurich ensure that it is delivering on its promises to customers and meeting clients’ needs and expectations.

“If we know our clients better, we can serve them better,” Tinetti said. “This is an extra opportunity for face-to-face discussion, which is so important in building relationships.

“We hear directly from risk managers what their pain points are,” Tinetti said. “This gives us insight on the risks we need to pay attention to, and helps us craft solutions to meet their needs.”

Based on their feedback, and the observations of the claims team, Zurich provides thought leadership and market insights with the goal of anticipating and proactively mitigating emerging risks.

“If our claims professionals identify recurring issues, we can conduct a broader portfolio analysis to identify trends and share these industry insights with our customers,” Jankowski said.

If trends emerge in particular loss types or frequencies, Zurich can respond with specific risk management recommendations, such as maintenance plans or formal safety programs.

Having a true risk management collaboration with an insurer will prove increasingly valuable as challenging market conditions persist and C-suites grow more involved with risk management. In the energy sector, the consequences of failure are often severe and very publicly visible.

“We are dedicated to offering longterm solutions for our clients so they can effectively manage their risks and expenses in the continued soft market,” Jankowski said. “We’re here for the long haul.”

For more information about Zurich energy & marine solutions and services available, visit zurichna.com and the Zurich Virtual Literature Rack, zurichvlr.com.

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. Zurich does not guarantee any particular outcome and there may be conditions on your premises or within your organization, which may not be apparent to us. You are in the best position to understand your business and your organization and to take steps to minimize risk, and we wish to assist you by providing the information and tools to help you assess your changing risk environment. Risk engineering services are provided by The Zurich Services Corporation.
©2016 Zurich American Insurance Company

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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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Services to Support Private Equity

Mergers and acquisitions continue apace, driven by low interest rates. But the risks involved are broad and complex.
By: | May 2, 2016 • 5 min read
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The year 2015 was a record for mergers and acquisitions, driven by an
environment of low interest rates, low organic growth and shareholder pressure for value.

For private equity firms, those conditions presented opportunities for expansion, but also made it more challenging to deliver high returns for investors year after year. A quiet IPO market adds to the pressure, robbing firms of their traditional exit strategy.

“IPOs launched within the past two years have been trading lower than their initial offering price,” said Andy Peterson, head of private equity for Zurich Global Corporate in North America.

“Scale does matter, and it’s been increasingly hard to go it alone. Mergers and acquisitions are ways to help spur growth.”

Activity in the private equity field remains high, and increased fundraising in 2015 means there is cash ready to keep M&A at the forefront of conversations in the deal room in 2016.

The risks involved in bringing two companies together are broad, complex and can diminish the value of any deal without proper mitigation. With far fewer IPOs, private equity firms are holding onto their portfolio companies longer, increasing their exposure.

Zurich_SponsoredContent“The right carrier partner can provide value at every step of the investment cycle — deal generation, due diligence, postacquisition and exit — through a mix of insurance products and enterprise risk solutions.”
— Andy Peterson, Head of Private Equity for Zurich Global Corporate in North America

Insurance not only protects PE firms from liability shouldered by acquired companies, but also acts as an asset to bring to a negotiation.

The right carrier partner can provide value at every step of the investment cycle — deal generation, due diligence, post-acquisition and exit — through a mix of insurance products and enterprise risk solutions.

“Zurich has the best-in-class capabilities to support our customers’ goals at every phase,” Peterson said.

Enterprise Risk Solutions

Enterprise risk solutions help private equity firms conduct due diligence more thoroughly, and can help them decide whether to continue with a deal or pull the plug.

Many of Zurich’s most valuable risk management insights relevant to private equity decision-makers come together in its proprietary Zurich Risk Room, an online aggregation of data that customers can reference as they research target companies, their industries and the risk exposures they may present at home and abroad. The tool can help customers identify the correlation between various risks and test assumptions before making a strategic decision.

“For example, a private equity customer is considering an acquisition in Germany. They can use tools in the Zurich Risk Room to create a flood map and determine flood exposure at the property. That could either bolster their confidence in the acquisition or convince them not to go through with the deal because the risk is too high,” Peterson said.

Zurich Onsite is another innovative tool that is changing the game for risk engineering solutions provided to many customers. The tool increases the transparency of the whole risk assessment process, and enables customers to obtain better insights from site visits than ever before.

These insights enable more informed conversations with the risk engineer during visits, prompting quicker action on risk improvement actions and helping businesses deliver on their loss prevention strategies.

Sophisticated Structures

Once a deal gets the green light, PE firms familiar with the utilization of captive insurers may be positioned to leverage that experience to manage many and perhaps all of their risk portfolios. Building a self-insured structure for an entire portfolio within a captive can deliver a high degree of flexibility while providing coverage for the risks that a firm could inherit from its assets. In effect, a captive helps minimize risk and maximize financial freedom.

“How we structure a program will differ depending on a client’s unique goals and risk appetite, but captives provide a way to pull an array of risks under one roof,” Peterson said.

International Capabilities

Companies looking to expand globally face additional challenges with local regulatory and compliance requirements. While North America still leads the way in terms of investment and deal generation, Europe is not far behind and Asia is gathering steam. Additionally, emerging markets offer more and more opportunities for companies to establish an international footprint.

“Your insurer has to have the capability to write local policies back to a U.S. master policy, and doing that well is a daunting task,” Peterson said.

He noted that Zurich is one of a few carriers with the international capabilities to support expansion and acquisitions abroad.

The information in this publication was compiled from sources believed to be reliable for informational purposes only. We do not guarantee the accuracy of this information or any results and further assume no liability in connection with this publication. We undertake no obligation to publicly update or revise any of this information. 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. The policy is the contract that specifically and fully describes the coverage, terms and conditions. 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 Loss Sensitive Alternative Delivers a New and Highly Flexible Solution for Global Risk Management

Multinational companies turn to insurers to help them meet global compliance standards.
By: | November 2, 2015 • 5 min read
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With the global economy growing apace, multinational companies face ever-increasing pressure to meet tougher compliance challenges surrounding their international insurance coverages that include a loss sensitive component.

Classic loss sensitive programs, which proved their mettle on the domestic front, may not always meet the challenges posed by the patchwork complexity of compliance and regulatory roadblocks that pop up across country and regional borders.

“Meeting these compliance needs can help companies reduce unexpected local or country issues relative to their operations,” explained Brian Winters, Head of Casualty Practice & SRS at Zurich Global Corporate in North America. Zurich, in a search for better ways to meet those specific multinational needs, began to survey the competitive landscape and came away with a number of options. After taking a deep dive, it realized that the “global corporate” market – companies with revenues in excess of $750 million – were hungry for a product that would help them meet those growing global compliance hurdles.

According to Winters, one of the better ways to get there is by using a sponsored captive insurance company which houses protected cells, a variation of a traditional captive that allows an insured to have an individual “cell.” Ultimately, the sponsored captive can be comprised of many cells that can be utilized by any number of companies. Typically, a sponsor company (Zurich) sets up and owns the core company, but allows for insureds to use their own “cells” for risk retention business in a compliant, cost-effective and flexible way.

Brian-Winters_230“Meeting these compliance needs can help companies reduce unexpected local or country issues relative to their operations.”
— Brian Winters, head of Casualty Practice & SRS, Zurich Global Corporate in North America

In Zurich’s case, the company will offer its new sponsored captive facility, to provide clients with the flexibility and efficiency of a captive cell model.

“We worked through all the different factors involved in starting up a sponsored cell captive,” Winters said. “Since the beginning of this year we picked up a lot of steam on the product, which offers our customers a product that lets them take advantage of their own experience.”

According to Steve Bauman, Head of Captive Services at Zurich Global Corporate in North America, as Zurich pressed its market research and talked to customers and brokers in North America, the company found strong demand for Zurich to be able to offer a product along these lines.

Bauman said the main genesis of the product is to offer a loss-sensitive solution. While many Zurich customers already own captives, for various reasons, they may not choose to use their own captives to help meet international compliance challenges. Plus, for customers who don’t already have captives, the cell facility also delivers that “loss sensitive” solution.

“The essence of our loss sensitive product offering is to provide customers with a broader product portfolio that can help them navigate those international compliance waters,” Bauman said. “Many of our customers, particularly in the larger market, appreciate a broad range of loss sensitive products, and Zurich aims to provide these solutions.”

Bauman added that the cell facility offering may start off initially in international casualty, but could also be highly effective in other areas within Zurich. In terms of domicile, Zurich chose Vermont, which has long been the top U.S. domicile.

Apart from global loss sensitivity features, Bauman said Zurich’s captive cell also delivers cost effectiveness because it operates under a shared-expense value proposition and it is highly efficient around collateral.

“Our program will administratively be very efficient,” Bauman said. “It’s not at all burdensome in terms of customers being able to step in and utilize the product.”

The Zurich product is secured through a trust, to help meet repayment obligations associated with loss sensitive programs. And while the typical group captive model does offer benefits, Bauman said these protected cells stand on their own for the exclusive risk profile of the individual insured.

With Zurich’s cell facility offering, all funds are segregated, giving the customers protection from the other insureds that may be using the facility. A captive cell provides many of the benefits of a stand-alone captive insurance company and the customers can benefit from Zurich’s expertise.

“We have done the groundwork and due diligence required to form the captive facility ahead of time, and efficiently manage the costs. We’ve already made the tough decisions required for such programs,” Bauman said.

Matching Zurich’s expertise is its technology prowess. For example, the company offers an award-winning proprietary tool for multinational insurance customers that tracks insurance compliance regulations worldwide. It is updated and upgraded constantly to provide our customers with the latest tax and insurance regulation updates on what’s going on around the world.

“It’s easy to imagine multinational corporations trying to do business in so many countries worrying about changes in the way countries pursue taxes and insurance regulation,” Winters said, adding that at the highest levels in an organization, there is no tolerance for compliance risk in terms of the global insurance program.

“The expectation is that the global risk manager is going to work this out, so our customers can really benefit from our technology on that front,” he said.

Finally, there is the pure geography. The Zurich loss sensitive option further strengthens our customer’s ability to do business with Zurich’s assistance in over 200 countries and territories, an extremely broad scope covering practically anywhere customers have business operations.

“We’ve been in the insurance business for over 100 years,” Winters said. “With this product we emphasize our commitment to the insurance industry.”

For more information about Zurich solutions and risk insights, visit zurichna.com.

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. 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. Any and all information contained herein is not intended to constitute advice (particularly not legal, regulatory or accounting advice). Accordingly, persons requiring advice should consult independent advisors when developing programs and policies. Zurich does not guarantee a particular outcome, reduction in costs, or improvement in administration and further assumes no liability in connection with the providing of these products.

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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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