Hot Topics

Hot Topics

M200 Zurich • June 5-7, 2018

1) Cyber Risk
Would love to learn from anyone who has undertaken a more diligent approach to understanding their
cyber business interruption risk profile -- identifying "mission critical" applications and/or significant
revenue streams, developing scenarios, quantifying exposure, working with stakeholders similar to
property programs in terms of applying BCP to systems and addressing vulnerabilities/recommendations
for risk improvement and loss expectancy reduction. (Stacey Regan, GE)

Potential contributors: Lagesse, Schönenborn, Baker, Nickel, Richardson
Member Comments/Questions:
Baker: We have done both a risk profile analysis and a limits analysis based on this analysis.
Nickel: I can discuss our BI process for cyber. It is a work in progress.

2) Emerging Technologies I
As regards the unavoidable, ubiquitous trend towards digitalization and automation, are there any
practical applications in the insurance industry of where new technology can help risk managers create
efficiency (other than sensors, healthware etc - I am referring more to the transactional side of
insurance, captives, etc.)? (Adrian Latimer, Schlumberger)

Potential contributors: Ribotta, Schönenborn, Smyth, Breutel, Baker, Nickel, Richardson
Member Comments/Questions:
Smyth: On the automation front, Robotics Process Automation (RPA) is a practical ‘here and now’ way of
automating rote/standard tasks that you may have. As a carrier, we’ve had some early success on the
transactional end. While more advanced, a machine learning approach to anomaly detection may be
interesting use case to explore the efficient and effective identification of outliers (claims, etc.). Similarly,
blockchain/distributed ledger technology is still early but certainly has a large emerging opportunity on
transactional end.
Breutel: We have started an IT procurement process to look for insurance transactional software. There
are providers which seem to offer functionalities we are looking for in the international/captive
insurance space. However, we will only be able to leverage this technology if all transaction stakeholders
are integrated!
Baker: We have implemented a Risk Management Information System that allows us to do further data
analysis without relying on brokers or insurers. We also use this information to make Captive decisions.
Nickel: I can discuss our use of chat bots for handle COI, internal questions.
Richardson: We have invested in RMIS systems to reduce/partially automate some tasks.

3) Emerging Technologies II
We are working on a chat bot solution for our internal stakeholders. I can discuss the solution and
current pilot program. It will handle COI's, Auto ID cards and other basic requests. (Loren Nickel, Google)

Potential contributor: Schönenborn, Baker
Members Questions/Comments:
Baker: We have outsourced this function but it is labor intensive and I would be interested in learning
more and especially if you are considering a commercial application.

4) NatCat (EQ)
Lack of capacity for EQ risks. Looking at cat bonds for alternative capacity. Information on any
experience with cat bonds would be helpful. (Loren Nickel, Google)

Potential contributors: Alain, Schönenborn, Breutel, Baker
Members Questions/Comments:
Breutel: Some years ago we looked into it with a consultant. On our portfolio size and spread a cat bond
approach would not have paid out (transaction costs; still a very liquid PD/BI market and no real business
case to access the financial market instead of the insurance market).
Baker: We have explored this in theory and worked with other travel providers to cover business
interruption from natural disasters without resulting physical damage - have not found it to be
competitive.

5) Captive Governance
We believe our captive board is lacking in diversity and would like to address this issue. Would be
interested in hearing how others have achieved greater diversity in their captive boardrooms. (Tom
Richardson, ABF)

Potential contributors: Foerster, Schönenborn, Breutel, Frost
Members Questions/Comments:
Foerster: Same issues within BMW Group; external board member not contributing enough. Alternative
solution sought after.
Breutel: We have added two independent directors this year (it is mandatory in Switzerland as of 2019 to
have 1/3 independent directors on captive boards). I was successful to recruit a solvency/actuarial expert
with an excellent experience background and professional track record. This was an excellent move as
was demonstrated at the very first board meeting he attended! It is great to have someone in the board
who is able to understand solvency models etc. And I recruited one lady with a professional risk &
insurance management background - she is my predecessor.
Frost: Interesting because our Captive in Australia is regulated as a general insurer we can offer some
insights here.

6) NatCat II
The market after the Hurricane Season 2017. Reactions from Insurers? Claims experience?
(Insurer/client?) (Jorg Schönenborn, Deutsche Telekom).

Potential contributors: Schönenborn, Baker, Nickel
Members Questions/Comments:
Baker: Would speak to this topic from a global real estate perspective.
Nickel: Small claims impact, and limited renewal impact for us.

7) Captive | Pension Fund
We are currently looking at using the captive to front longevity risk for our pension fund. Interested in
whether other members have completed similar transactions. (Tom Richardson, ABF)

Potential contributor: Foerster, Schönenborn, Breutel, Mahnke
Members Questions/Comments:
Foerster: BMW is currently in a transaction to buy out a GBP 110m UK pension fund and is investigating
captive participation.
Breutel: Not longevity. My HR & Benefits colleagues approached me to consider salary payments in case
of health related work disability (here it is known as "Krankentaggeldversicherung"). Some captives in
Switzerland/Liechtenstein do this kind of insurance. However, there are negative trends driving such risk
taking and the commercial sector is already under stress. For us it is much too capital intense (without
having done a very in depth analysis) to consider this. I declined.
Mahnke: We have reinsured longevity risks twice through our reinsurance captive for two fully funded
UK Pension funds.

8) International Programs
International Programs (P&C, but also other LoB): What is the added value of having a global broker
involved on the country level? What is the brief/job description you give them to support your local
business? Background: Syngenta traditionally does not engage centrally a global broking firm to support
local insurance/claims transactions. We leave broker engagements to our regions (LATAM and US/North
America each have selected a broker network on their own). However, we ask ourselves whether a
default broker intercession makes sense against the background of a very diverse local policy situation if
we fully turn to a “best local standard” model (and despite the fact that we use a global loss adjuster
provider). (Claude Breutel, Syngenta)

Potential contributors: Schönenborn, Bradley, Frost, Regan, Richardson
Members Questions/Comments:
Bradley: We don’t use a local serving broker.
Frost: We use brokers for local service and can offer insight here.
Richardson: Can provide a view on this, we do have a global appointment.

9) Legal Protection Insurance
Does anyone buy separate legal protection insurance? The question comes up whether supplementary
to D&O it makes any sense to purchase insurance for general legal representation? In a prior
assessment, we found that the cover is restrictive where it is most needed, but I am curious to learn
about your experience or approach. (Claude Breutel, Syngenta)

Potential contributors: Foerster, Schönenborn, Baker, Mahnke, Regan
Members Questions/Comments:
Foerster: BMW does buy legal protection insurance; however this is not intended to be a "sleep easy"
solution for management.
Baker: U.S. attorneys are required to carry legal malpractice insurance. Although not necessary for
corporate attorneys, we have bought a separate E&O policy that includes legal for pro bono work that
the legal department has undertaken in concert with a local law firm to help disadvantaged individuals
with housing needs. I would also provide coverage in the event of a malpractice claim against a
corporate lawyer.
Mahnke: We are purchasing separate (criminal) legal protection insurance as an add-on to D&O and for
all employees.