The insurance buyer's view

Brian Rogers: I’d describe it as dynamic, and in the midst of some transformation.

I’ve been in my role of leading insurance procurement for Tyson Foods for close to six years, and in that time, I’ve seen a lot of ups and downs. Other risk managers tell me that I’ve lived a 30-year risk management career in just those six years. We’ve gone through a 100-year pandemic, the constant threat of climate change, new emerging risks that are popping up all the time, and now we’ve got war exposures.

And I think all of that is forcing both the insurance marketplace and senior executives within companies to be creative — to think things through and accept new ways of approaching risk. That includes new insurance facilities, creative financial structures, and opportunities to provide more efficient risk financing options, whether you’re looking to retain risk or transfer it to insurers.

Brian Rogers: I’d say it’s the derisking environment we’re seeing. We’re seeing some insurers push for rates to stay the same, but they’re cutting limits and restricting terms and conditions. For a lot of insurers, it’s difficult to effectively price right now, and that’s part of why we’re seeing some new exclusions.

Those exclusions can put pressure on an entire tower, from both a pricing and terms and conditions perspective. That forces buyers to find new markets to support their programs or, if they’re already tapped out there, get creative. That means trying to get more out of captives or exploring alternative risk options so they can ensure they have the same amount of coverage as they have historically.

And as buyers, we have to constantly reevaluate our program. We have to keep asking whether the program is actually protecting us and our balance sheet, both in the short term and the long run.

Brian Rogers: We want to see them expedite the process of producing viable options — from both a pricing and coverage terms perspective — that allow us to protect against risks in the long term. We want them to be able to better understand their risks so we can level out those peaks and valleys of pricing.

A big problem for us is that we sometimes see pricing whiplash — rates go down one year, and then the next they increase significantly. So more sophistication by the insurers and a more consistent experience that smooths out those peaks and valleys would obviously be a big benefit to us from a financial budgeting standpoint. Ensuring carrier partners understand your business and educating them about emerging risks in your business class can also lead to coverage solutions.

Brian Rogers: My department oversees global insurance placements in more than a dozen countries, but we’re expected to be extremely lean. So we need to be able to trust our broker partners to deliver value. That means, one, understanding our business and the insurance markets, and two, being able to provide data analytics to help us answer the question we’re always asking: “What’s the optimal way to manage this risk?”

It’s especially important that our broker deliver in useful and relevant analytics because that’s one of the hardest things for us to do internally. Good data can also help me explain key decisions to senior leaders. Quantitative analysis communicated clearly and easily to executives without any insurance background can help us earn their trust and confidence.

Brian Rogers: First, I’d say be proactive. Make sure you keep your finger on the pulse of what’s going on in the industry and in your organization, whether it’s property, employee safety, or product quality — for us, that’s food safety. Maintain a dialogue with the people in your organization and ask what they’re concerned about for the next few years, and pair that with an enterprise risk management view to figure out what’s next — what risks are going to be important over the next 10 or 20 or 30 years. You should also expect the same from your carriers and your broker partners. Are they constantly thinking about what’s next?

My primary job is no longer just the basics of understanding our exposures, gathering our existing policies, and reviewing our insurance programs. It’s now more about understanding and looking at what we need to address 12 to 24 months from now and finding solutions for those challenges.

Second, you need to choose your insurers carefully. You want to work with carriers that are committed to being long-term partners and helping you avoid big swings in pricing, but price can’t be your only target when putting an insurance program together. You must make sure that your top insurance partners are going to be there to support you if you have a catastrophic loss, or to help address emerging new risk solutions that may not be covered under your current program.

Those kinds of losses are occurring more and more frequently, and if you suffer a big loss, you’re going to need to rely on your insurer. Setting up a structure such as tier 1 and tier 2 groups of insurers — just as a complex business’s treasury team may do with a group of banks — is also important, so you have sufficient bench strength if there becomes a sudden need to change carriers.