Major industrial companies have global networks. Risks are becoming more and more complex, as are the demands that industrial insurance has to meet. Wolfgang Faden, CEO AGCS Germany & Central Europe, and Klaus M. Przybyla, Deputy CEO, recently invited the chairmen of the three German policyholder associations (BDI, DVS, BfV) to Munich to discuss this issue. The guests were Harry Daugird from ABB, Klaus Greimel from E.ON and Hans Jörg Schill from Fraport AG.
Wolfgang Faden: International companies such as ABB, E.ON and Fraport are exposed to considerable global risks. As the heads of their captive agents, what strategy do you pursue in this respect?
Harry Daugird: At ABB, we have a global risk approach that we manage using tools such as "total cost of risk" or "global insurance plans". The global risks that affect our company, and others, increasingly include customers' contractual provisions, especially in respect of what is known as purely financial loss.
Hans Jörg Schill: At Fraport AG, we don't have a direct "global" but rather an "international" business model. Unlike with global companies that have production facilities worldwide, the airport operation business and the associated risk management is primarily a local business. Our main risks are also liability claims or business interruption losses. We manage our global risk approach via an internal risk management committee.
Klaus Greimel: At E.ON, we look at risks against the backdrop of global challenges. We have an effective, established risk reporting process and are also closely involved in the overall corporate process in our role as the central control function for the entire Group.
Faden: Increasing globalization also means the increasing globalization of legislation…
Schill: …a trend that we obviously have to keep up with, also for compliance reasons.
Greimel: Of course things are becoming more complex. If necessary, we also call upon the help of external partners. This makes a lot of sense, particularly in an international environment where our partners have the necessary experience and local presence in the countries that are important to us.
Klaus M. Przybyla: We feel that reputational risks are becoming more and more of an issue in our global world. Is that your experience, too?
Schill: Reputational risks, wherever they arise in the world, have to be evaluated and tackled in a pro-active manner. At Fraport, we do this using our Group-wide compliance program, via sustainability management and by involving representatives from different interest groups early on and in the long term.
Greimel: In our case, reputational risks can arise as a result of our Group focus – as we can see from the current nuclear energy debate - and less as a result of our actual products, i.e. electricity. Events outside of one's own area of responsibility can have an impact on an entire sector.
Przybyla: We have noticed an increase in political risks across the globe, especially in the recent past. Just consider the "Arab Spring". What does this mean for the role and significance of risk managers at global companies?
Greimel: At E.ON, Risk Consulting is involved in all M&A activities early on. I believe that this is a must to ensure that information on potential political risks can be included in the decision-making process in good time. At companies with a clear risk-mapping strategy and defined processes, I believe that the current trend will strengthen the role of risk managers - provided that they are actively involved.
Faden: What do global companies expect of an industrial insurer like AGCS today?
Daugird: It has to have an international standing and be able to take action worldwide with a cosmopolitan workforce that boasts solid expertise. Then, there are important factors such as system and IT capacity in respect of underwriting and claims settlement.
Schill: This is why we expect to be given tailored insurance solutions for different risks in the countries that are relevant for our business. We want insurers to be reliable partners when it comes to providing adequate protection against complex risks. Professional claims processing and fast product development are hugely important in this respect.
Greimel: But some insurers still believe that they can sell a standard product. A good idea, however, is not enough, especially not at international level. Today, AGCS is very good at working with its customers to pinpoint individual solutions.
Przybyla: Talking of the international business: where do you think the trends are going on the insurance market?
Schill: Examples of new developments that are currently being discussed include national online trading platforms. We buy our insurance policies internationally, meaning that we have been tendering for our policies based on EU law for many years now.
Daugird: We always have to discuss our risks, specific needs and demands with the insurer. Naturally, this sort of communication can be optimized as well. But direct contact remains the "non plus ultra" in the industrial business.
Greimel: As far as loss prevention and support in the event of claims is concerned, dialog with the insurer in advance, as Mr. Daugird just said, is an absolute must. After all, we're buying a service promise.
Schill: I can only confirm that. Our cooperation with AGCS has developed very favorably over the past few years, especially with the introduction of fixed points of contact.
Daugird: Nevertheless, a Key Account Manager also has to be able to exert internal influence, especially in the international business. This is extremely important, particularly for top customers at global level. Here, too, the development at AGCS as part of the new structure has been very positive.
Faden: This is why we intend to expand our Key Account Management at AGCS further over the next few years. Our focus is on our customers and our customers need and value a personal relationship and direct contact with fixed points of contact – as you have just confirmed. Key Account Management has become a decisive factor in our customer relationships.
Przybyla: Let's finish by looking at another important issue: you represent DVS, BfV, and the insurance committee of the Federation of German Industries, BDI – how will the duties and activities of these associations develop in the future, particularly in an international context?
Daugird: From BDI's perspective, I can say that European and international dimensions mean that the insurance committee's objectives are already no longer restricted to purely national issues. Solvency II is one current example.
Greimel: As the representative of the interests of the entire insurance buyer industry, DVS will be even more committed to making the expertise available in our committee available and usable for all of our members in the future. There is a lot of knowledge and expertise in Germany, especially as far as captives are concerned, and we want to and have to pass this knowledge on in the form of advice.
Schill: I believe that the main role of the associations is to bundle common interests and to exchange opinions and knowledge on current issues and challenges. Obviously, captive agents are a very "German" breed, and as the body responsible for representing the interests of these agents, BfV focuses primarily on German companies. Nevertheless, the expansion of the association's activities, for example in the greater German-speaking world, is definitely a welcome development.
Harry Daugird is the Chairman of the management team of Komposit GmbH, the captive agent of the Swiss energy technology group ABB, and is also Chairman of the insurance committee of the Federation of German Industries, BDI (Bundesverband der Deutschen Industrie e.V.). After studying law in Hamburg and San Diego, he started working in the legal department of ABB in Mannheim in 1977, before moving to Komposit in 1985. www.abb.de
Hans Jörg Schill is managing director of AAV Airport Assekuranz Vermittlungs GmbH, the captive agent of Fraport AG. Ever since March 2011, Schill has also been President of Germany's in-house broker and captive association, BfV (Bundesverband firmenverbundener Versicherungsvermittler- und gesellschaften e.v.). After working at Hannover Re and Siemens AG, Schill has been with AAV GmbH since 1998 and has global responsibility for all insurance matters concerning Fraport AG and its subsidiaries. www.fraport.de
Klaus Greimel is managing director of E.ON Risk Consulting GmbH and, since 2011, has been Chairman of the German insurance buyers' association (Deutscher Versicherungs-Schutzverband e.v. - DVS), an organization that represents the interests of all insurance buyers in Germany. Mr. Greimel, who has a degree in economics, has been at the Düsseldorf-based energy company since 2000. Before joining E.ON, he was managing director of Deutsche Industrie-Versicherungsstelle GmbH and also worked at Zürich Versicherung. www.eon.com