Embedded Insurance Gives People Peace of Mind

Embedded insurance solutions

The biggest problem of the insurance industry today is the fact that the sales of an insurance product are separated from the sales of the core product or service that the insurance is associated with.

As a consequence of such “separate sales”, the insurance product is often rejected by customers as an unappealing hassle, causing a huge gap in protection in the end. And, due to market changes in terms of digitisation, climate change and lack of innovation, this gap is just getting bigger and bigger.

Buying insurance online is still a major issue for most customers because of the complexity involved. That is why most insurances are still sold offline. True, customers research online but cannot make a purchase online.

Closing the gap with embedded insurance

One solution is to embed the insurance into the digital service offering. This means offering the insurance on the spot, when the need is there and when the risk is a top priority for the buyer. Embedded insurance bundles the insurance coverage or protection while the customer purchases a core product or service. The insurance is no longer sold separately to the customer, but it is provided as a standard feature of the core product or service. The customer thus gets a more affordable, relevant, and personalised insurance when its needed most.

Looking ahead in volatile times

If we look at what happened all over the world recently, what is currently happening and if we are wondering what will still happen, we will agree that we are facing massive, serious, and stressful life events. Whether the Covid-19 pandemic, the war in Ukraine or a potential blackout crisis – events like these hit us physically, emotionally and financially. Consumers all around the world have felt it and continue to face extreme consequences. Many have lost their jobs and many are tackling with a decrease in income.

Events like these dramatically change consumers needs and preferences, making them more open to new, innovative products and new ways of purchasing products. More importantly, customers now want to reach for simple and affordable products with obvious, yet strong value propositions.

Consumers are looking ahead, they are trying to plan and find ways that will protect their life, health and well-being. They want to be better protected, just in case they must deal with a new crisis. They have become proactive rather than reactive. Insurances that will cover their hospitalisation expenses, life insurances with an emergency funds availability or protection of their income is what they are now focusing on.

They are looking for innovative products, embedded solutions and new ways of insurance distribution. Consumers expect the insurers to understand their needs and satisfy those in easy, direct and most affordable ways. They want insurers to help them feel somewhat normal again and provide them with new ways of engagement.

The role of embedded insurance

Embedded insurance helps customers when they need it most. It provides them with the possibility to protect their lives, their health and their lifestyle at the right point in time.

One example is an electricity company that decided to offer customers a free-of-charge bill protector insurance that covers customers’ electricity invoices in case of unemployment or a work inability.
They found a way to show their customers that they care and that they are there to help when things get rough. They also show them how much they appreciate their loyalty. This is exactly what customers expect during volatile times.

Embedded insurance can help people recover from the stress of the pandemic, the economic effects of the war and other serious life events by adding great value and combining it with great insurance solutions via new distribution channels and new ways of customer engagement.

Sources:
https://www.ey.com/en_gl/insurance/how-can-insurance-protect-the-customers-who-need-it-most
https://www.micglobal.com/reasons-why-embedded-insurance-future/
https://medium.com/digital-diplomacy/embedded-insurance-cbc408ebfb7
https://www.albion.vc/blog/why-we-are-excited-about-embedded-insurance-2021
https://www.linkedin.com/pulse/embedded-insurance-3-trillion-market-opportunity-could-simon-torrance/

Alma Ribanovic

Group Practice Leader Affinity

T +43 664 962 40 17

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Latest news from the Russian insurance market 2022/2023

News from the Russian insurance market 2022/2023

As we reported earlier, after the outbreak of the war in Ukraine Russia and Belarus have been cut off from the Western international insurance markets by regulations put into force by both the European Union and the Russian Federation.

GrECo and MAI decided to leave Russia, but since it is very important for us to support our clients and those of our business partners worldwide, we opted for continuity and sold our companies to the local management headed by Andrey Panov, who will run the company on the local market as Russian company Nobilis Brokers. In this update of our report, we want to give broad information on news from the market in Russia, as there have been many changes during 2022 and many developments may still come.

Status of insurance in Russia

The Russian insurance market consists of 222 market players (146 Insurers, 58 licensed insurance brokers and 19 other insurance related companies – based on official report, provided by the Central Bank dd. 01/04/22), but their number is decreasing (e.g. minus 7 within one year).
 
After the restrictive measures taken by the state in connection with Covid-19 in 2020/2021, the insurance industry was recovering, but the outbreak of hostilities in Ukraine had huge consequences on the local market during last year..

  • The market is cut off from international reinsurance – so capacities offered shrink to the net capacities of insurers plus capacity of Russian National Reinsurance Company (RNRC) that has been strengthened in its role by a capital increase by Russian National Bank;
  • All Russian insurance companies have to offer RNRC 50% line in all outward reinsurance business (the compulsory ceding RNRC by Russian insurers was increased from 10% to 50% of reinsurance order, in accordance with Law FZ 46 dd.08/03/22);
  • The financial security of Russian insurers (satisfactory in the past) will worsen substantially, rated international reinsurance is not going to be available for some time to come;
  • There are currently four Russian insurers being under EU and/or US sanctions: SOGAZ, Rosgosstrakh, SberInsurance (non SDN list) and Sovkombank Insurance. Sanctions do, of course, not apply for purely Russian business, for instance if the Russian subsidiary of an international group buys insurance on the Russian market.
  • Russian insurance companies continue business using their own increased capacity (co-insurance schemes for bigger risks) and increased reinsurance by RNRC.
  • For the time being, the financial data of Russian companies are not to be disclosed due to an order by the Central Bank of Russia.
  • The main local Insurers at the local market are: Sogaz, Ingosstrakh, Sberbank, AlfaStrakhovanie, VSK.
  • During the first six months of the insurance legislation in 2022 main international insurers were to stop their business activity (they decided to put a ban on quotes and policy issuance for new business and even renewals), but none of them has declared its exit.

The situation with Western insurers that have been working in Russia is as follows:

  • Zurich Russia sold the business to new Russian owners and was rebranded – the new name is Turicum”;
  • AIG Russia sold the business to new Russian owners; it was rebranded at the end of 2022 – the new name is “Gardia”;
  • Chubb Russia has not announced further decisions regarding the Russian entities; right now they cannot issue new or renew expiring policies;
  • Allianz Group sold a majority stake in its Russian operation to InterHolding LLC, the owner of Russian P&C insurer Zetta Insurance. Allianz Russia holds a minority stake of 49.9% in the combined company;
  • HDI Russia still continues operating business activity with no change during 2022.

Risks located in Russia not any longer covered by International Programs

Coverage in a global insurance program with local fronting policies is now unavailable for risks located in Russia due to the territorial exclusion clauses of Western insurers and the impossibility to integrate Russian policies for lack of international reinsurance. Thus the only option is local stand-alone insurance with purely Russian Insurers.  

Market tendencies

The following tendencies can be observed on the market:

  • In general, Russian insurers are ready to place traditional lines (PDBI, TPL/ PL/ EL. PI, cargo and D&O), however it is still a hard market for the line Fidelity/Crime (difficult and expensive to place);
  • Insurance tenders are subject to preliminary providing very detailed underwriting information (filled in insurance questionnaire on each insurance line);
  • Tenders take longer and usually the insurance offer is valid for 30 days only;
  • The main T&C with the local insurers may differ from former policies that were part of global programs (lower limits, different wording); the prices for such policies are likely to be higher;
  • Increased interest for “terrorism” and “war” cover in all lines (but mainly in property and cargo); but most local insurers, on the contrary, extend exclusions of territory coverage (due to war risk);
  • Due to very poor loss statistics within the last years on the local insurance market in respect of warehouses (stock insurance) and 2 total losses, well-noted at the local market (Ozon warehouse and OBI store), lots of local carriers are either not interested in providing the coverage or need at least very detailed info on the location (or may be a survey carried out by their engineers) for even giving a quote;
  • Despite the current situation, there is an increase of motor insurance (values of the car/ spare parts were increased, change of “basis rate” for CMTPL policies) as well as cargo and property insurance (for legal entities).

Local support provided by Nobilis Brokers

Telephone and internet communication with Russia is working despite the current political situation. For more detailed information on insurance in Russia and for support for insuring or placing risks Nobilis Brokers can be contacted directly by e-mail: A.Panov@nobilisbrokers.ru .
 
(Details of this report have been provided by Andrey Panov and Anna Dyachenko, Nobilis Brokers).

The article is written by Andreas Krebs.

Paul Spittau

Head of Group Carrier Relations & Insurance Mediation

T +43 664 537 17 42

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More Creative Thinking to Solve Complex Problems

“To achieve the possible, we must attempt the impossible again and again.”
 (Hermann Hesse).

Back in the 15th century, Leonardo da Vinci thought out what was considered impossible. He drew up plans for flying machines, automata and robots – things that turned into reality only centuries later.

Is there a willingness in today’s Europe to think out the impossible once again to create new possibilities? The necessity certainly exists as crises, wars and catastrophes call for more creative thinking to help solve complex problems. Corporate intellectual property, international networks of think tanks, knowledge pools using data bases and digital platforms, and if-then functional processes on a meta level are just some of the buzzwords that spring to mind.

EU: New Horizons

“Horizon Europe 22 – 27“ is the European Innovation Council’s ambitious EU programme to strengthen science and technology through research funding, aiming at a competitive position on the world market while taking climate protection into account. Some 95 billion EUR have been earmarked for this EU-wide research and innovation programme.

Given the necessity to rethink the future – also in light of environmental protection – and better safeguard it against new crises, this is a drop in the ocean. To name a reference value: Europe’s NATO countries have budgeted about 400 billion EUR for military expenditure. Looking at the “Horizon Europe” expenditure, every EU citizen contributes an amount of about 59 cents every day.

However, to develop real sustainable solutions in research and innovation, a tenfold investment would be required. A paradigm shift would mark the first step, starting with primary school children as they will be the main decision makers in thirty years. They should be motivated not to wait for outside help, but to take action themselves.

What is called for are more playful methods of school education to convey problem-solving skills, the promotion of tax-deductible university and non-university research, and our will to elect politicians who are willing to make unpopular decisions and who demonstrate a broad horizon. When it comes to constructively meeting challenges, many parts of our society are helpless. A recent tweet read “Who hates this government as much as I do?” – many commented that their hate was even greater. Only a few replied by saying something like “Go into politics and show us that you can do better”.

Supply chain disruptions

All over the world, uncertainty prevails. Disruptions of local supply chains in 2015 have cost Europe about 50 billion EUR. Since then, economic turbulences due to trade restrictions and protectionism, driven, among other things, by increasing geopolitical instability – such as Russia’s despicable war with Ukraine as well as its impact – the climate crisis, the COVID-19 pandemic as well as strikes in the transport sector as a result of inflation, have been exacerbated and will surely cost many times more each year than back in 2015.

The impact of just one factor becomes visible by looking at soaring container freight rates since the pandemic: These rates have, at times, increased tenfold. Reasons being a global container shortage and disruptions in subsequent shipping caused by temporary port closures in China, to name an example. Given the sustained high container freight rates, we may notice a shift in the flow of goods. Those goods that were cheaply produced in China, yet were subject to costly transport, could perhaps be produced in Europe and cost less in the end – provided the required raw materials and resources are readily available. A polluting transport of goods en route to their finishing processes could be reduced at the same time.

Disrupted supply chains also have a negative impact on JIT deliveries, ensuing in production downtimes and financial losses. Some businesses have responded by reactivating vacant storage facilities or building new ones to ensure they have an adequate supply of raw materials at hand for processing.

Technologies of the future

Action must be taken in the face of these turbulences while exploiting every possibility provided by available instruments: RPA, IOT, analytics and digital collaboration. Managers must keep their fingers on the pulse of time and implement the next steps in line with current digital and technological developments, including blockchains and other open sources, smart logistics and Physical Internet, drones, connected cars as well as self-driving vehicles, e.g. van and straddle carriers used in port areas. Today’s key decision makers will have to deal with the transport technologies of the future, such as platooning or hyperloops, and follow in the footsteps of Leonardo da Vinci.

Transcontinental infrastructure networks

China and many other states as well as institutional investors have poured large sums of money into the New Silk Road – on land (Silk Road Economic Belt) and sea (Maritime Silk Road) – enabling the establishment of new intercontinental trade and infrastructure networks between China and other Asian countries, Africa and Europe. Once completed, the project will have an impact on more than half of the world’s population and about 40% of global trade.

The speed with which the project has moved forward over the last 10 years since its start is best demonstrated by a small-scale example in land transport, a much smaller portion of the New Silk Road: in 2013 some 80 container trains from China Railway Express Co. used it en route to Europe, in 2020 this number grew to 12,400.
China also invests heavily in European infrastructure, especially in ports in the South, Piraeus or Triest. Travelling times to these ports are shorter than to those situated along the North Sea. Given recent geopolitical upheavals – and looking at the situation with Russia and resultant traffic and transport complications – warnings are increasingly raised against an over-dependency on China. There is also criticism being levelled against the fact that countries and communities receiving financial support may fall into a debt trap. The EU is also troubled by bilateral agreements between China and European countries. This could accelerate a split within the EU.

What could be more appropriate for the EU than to redirect the focus on itself? In the medium and long term, nearshoring instead of offshoring could be a solution. Despite differing views on various issues in individual countries, Europe has some undeniable advantages over other states and other continents: less cultural and work ethical differences, easier ways of collaborations due to geographical proximity, hardly any differences in time zones, shorter travel distances, etc.

With Trans-European Networks (TEN) to accelerate developments and shape the European domestic markets, the EU significantly contributes to economic and social solidarity. Streamlining the infrastructure of transport systems through the Trans-European Transport Network (TEN-T) as well as the energy and telecommunication sectors are its key drivers.

TEN-T aims at implementing and developing a Europe-wide network of railway lines, roads, inland waterways, maritime shipping routes, ports, airports and railroad terminals and improve their environmental compatibility. The ultimate objective is to close gaps, remove bottlenecks and technical barriers, as well as to strengthen social, economic and territorial cohesion in the EU.  In light of the global political (and economic) landscape, pushing forward with efficient, well connected and environmentally friendly infrastructure in terms of TEN will be key for competitiveness, growth, job creation and the wealth of EU countries. It will also help make the EU less dependent on countries that trample on human rights, employ other value systems in terms of business ethics, and ignore environmental protection. In turn, this also means not to move forward with globalisation at all costs but to ensure healthy economic growth and stability in Europe.

3D printing – a game changer?

3D printing could become a gamechanger. It is already used for medical protheses, toys, shoes, clothing as well as for cars and even for houses recently. 3D printing is a fascinating technology for large automotive companies as they manufacture cars in large quantities. Car bodies and individual parts can already be produced through 3D printing. The recently launched Mercedes Vision EQXX is an electric vehicle that features numerous 3D printed parts – with obvious advantages: if raw materials are readily available, prefabricated parts no longer need to be transported over great distances, making them more environmentally friendly while costs are saved and production times shortened.

In summary: The rapidly changing geopolitical situation, the climate crisis, the COVID-19 pandemic and many other factors have made it necessary to rethink the world, and Europe. New technologies are partially both cause and result of these rapid changes that are taking place and will still take place.

Securing new risks // Protection from new risks

Whereas some existing risks will take a backseat, new and unknown risks will arise often unexpectedly. Protection against these risks will be the key to ensuring the economic survival of many businesses. There is only one good solution: collaborate with an insurance broker who thinks ahead and thinks the impossible: GrECo – matter of trust!

Otmar Tuma

Advisor Transportation & Logistics

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Risk Management 4.0 Shields Against Volatile Risks

Why insurers should partially block out the past and why forward-looking companies should take charge of their future – because one thing is certain: Nowadays, risk management is more in demand than ever. 

Whenever insurers decide whether to provide coverage for specific risks, they turn towards the client’s past claims experience. That is how the first insurance came into being hundreds of years ago, and the same principle is still applied today.

When negotiating annual renewals insurers turn towards the client’s claims history and include it in their new offer. If an insurer backs out of a contract with a particular sector or an insurance line, it’s because negative experiences with claims in the past have earned him no money. Similarly, any required risk improvement measures also derive from past claims experience.

In times when risks develop gradually at a slow pace, this principle of assessing the past claims history works quite well. Insurers know what to expect, they consider and calculate appropriate provisions, set prices accordingly and include these in their conditions.

What happens if the risk landscape changes in a snap or new risks seem to appear out of nowhere? 

The steps insurers then take are best explained by looking at the recent cyber insurance examples. The pandemic boosted digitisation and in turn, changed the cyber risk landscape. In response, prices skyrocketed, capacities were reduced, levels of excess increased, risk dialogues became even more laborious and new demands were made. Some businesses received no offer at all for their cyber insurance, and some insurers publicly questioned the future of the product. Many reacted in an almost panic-stricken manner.

Would such radical measures also have been taken if there were no pandemic? We doubt it. Cyber risks were on the rise even before the pandemic and were treated as an accumulation risk.

But why should insurers block out some of the past in such cases? 

It’s quite simple: insurers react as quickly as risks change, but so do businesses. If you ask the management of a company whether it would prefer ”no damage” over “full damage cover”, the reply would be “no damage” in 99% of the cases. That is why investments in cyber security have been stepped up in many companies over the past months. At least now all management levels are highly aware of the topic. The quality of risk has improved considerably as a result.

Unfortunately, some international insurance groups struggle with a moderate approach as loss events affect them globally. The countermeasures they take (in their panic) often tend to be overkill for the individual company. But it is precisely the responsibility of industrial insurance to balance this volatility. Insurers should rather stay calm, work hand in hand with their business clients and moderately shape and make the changes needed to manage the risk landscape. This builds trust – and customer loyalty.

There’s a need for Risk Management 4.0 

Businesses are cautioned to not only rely on industrial insurers as some, to date insurable risks, could suffer the same fate as cyber insurance. Just think about climate change or coverage against natural disasters. Besides, there are many – often new – risks which cannot be insured and which change just as rapidly.

Industrial companies must increasingly come to grips with future risks, strengthen their risk management in the process and place it at the top of their agenda. This, however, means more than just implementing the risk improvement measures which insurers impose upon them – something which almost all market players have propagated at an inflationary level, and which only addresses the past. It is rather a matter of defining future risk changes, determining their possible consequences for one’s company and preparing accordingly – a forward-looking risk management 4.0, so to speak.

A partner who not only focuses on mere risk transfers but acts as a risk adviser, who sends out the right signals and provides expertise through a know-how pool can create real added value for industrial companies. By working in tandem with clients the insurance partner can help to meaningfully shape the future in an ever more complex, interconnected, and fast-moving world.

Andreas Schmitt

Vorstand Risiko- und Versicherungstechnik

T +43 664 962 40 11

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”The World Is in Big Trouble.“

Our CEO Georg Winter shares his views on why geopolitical transformation is our focus this year and why it exacerbates existing risks and causes new risks to emerge.

Secretary-General António Guterres made this statement at the General Assembly of the United Nations on 20th September 2022 in New York.

We are undergoing times of permanent change, which many refer to as systemic transformation or multiple crises strung together. This change takes place in different fields and segments. They, in turn, are interlinked at various levels. HORIZON’s risk-oriented approach aims to define and outline the key areas of change affecting your company. In doing so, we take a close look at the systemic influences of ecological, geopolitical, technological and social transformation on your company’s risk landscape.

The 4 Risk Changers

The 4 Risk Changers

These transformation processes are very dynamic, they are often interdependent and thus characterised as complex processes. They also result in systemic risks. Managing them requires much more than traditional methods of risk management.

In terms of risk management, we refer to these systemic risks as “risk changers” that directly affect companies and categorise them as follows:

  • “Environment in danger” for ecological,
  • “Beyond globalisation” for geopolitical,
  • “Digital transition” for technological and
  • “Social disruption” for social transformation.

HORIZON – “Risk Thought » Fast Forward” is our platform for so-called risk thought leadership. It is based on our vision to detect the impact of these risk changers at an early stage and introduce risk management solutions that boost our clients’ resilience.

How do the 4 Risk Changers affect companies?

Companies are exposed to various kinds of risks. At the same time, systemic transformation exacerbates existing risks and causes new risks to emerge. These primary risks have a direct bearing on companies.

 How do the 4 Risk Changers affect companies?

Primary risks – Transformation leads to direct exposure

Ecological risks
When we look at climate change, we refer to climate risks. They are apparent in form of a changed or an increased exposure to natural disasters, such as floods, storms, hail as well as heat, drought or a rising sea level. As far as companies are concerned, these risks can cause anything from material damages to disruptions of transport routes, in energy, or raw material supplies.
 
Geopolitical risks
Geopolitical change, characterised by an economic bloc having been established between the USA and China, has put free world trade to the test. It also shows, by looking at Russia’s invasion of Ukraine, just how quickly a system conflict, which we thought had been settled between the democratic and autocratic world, can be reignited. All that, exacerbated by global events, like the Covid-19 pandemic, puts pressure on the availability of energy resources, disrupts supply chains and leads to a global wave of price hikes that challenge governments, businesses, and the civilian population alike.
 
Technological risks
Technological change has resulted in an over-dependence on data, software and IT infrastructure. All are targets of a rapid increase of cyber threats all over the world and are thus one of the biggest threats of the 21st century.
 
Social risks
The growing divide between rich and poor, the lack of equal opportunities regarding age, ethnic background and nationality, gender and gender identity, physical and mental abilities, religion and ideology, sexual orientation and identity as well as social backgrounds increases social tensions. The Club of Rome deems equality and justice as part of the ideal solution for a liveable future.

Companies cannot shirk their responsibility in this regard. For instance, social issues are becoming more and more important as we are facing an inevitable demographic change that has already resulted in a systemic shortages on the job market.
 
Correlation
The interdependency of these systemic risks is best demonstrated by the war in Ukraine: From a geopolitical point of view, it has led to an energy crisis. In terms of technology, it has led to an increasing number of cyber threats. On top of that, well-targeted campaigns are aimed at splitting society and disturbing social peace in our Western world. From an ecological perspective, however, there is hope that our efforts to reduce carbon dioxide emissions can finally be carried through.
 
Systemic change – Primary and secondary risks

Systemic change - Primary and secondary risks

Secondary risks – Adaption creates new chances and challenges

Besides these primary transformation risks, which affect companies as “pure risks” from the outside, systemic change leads to secondary transformation risks that are “speculative”. They derive from companies’ adapted business models that were developed in response to the systemic change and comprise both risks and opportunities.
 
Ecological adaption
In the fight against climate change, many companies have decarbonised their processes or have developed sustainable products. Saving resources and taking advantage of new opportunities are key focal points. However, new products and processes lead to new risks that must be identified at an early stage.
 
Geopolitical adaption
As a result of the geopolitical change, companies had to explore new markets and new sources for raw materials and find new ways of attracting both customers and suppliers, while keeping a watchful eye on possible dangers. Although the currently rising energy prices still paint a different picture, supply chains can be shortened through nearshoring. This could very well result in a wave of reindustrialisation in Europe.  
 
Technological adaption
Technological change enables us to pursue totally new paths. While the automation and digitisation of value chains is gaining importance, the full potential of mergers, transparency, big data, and metadata remains to be exploited. Manufacturers of previously traditional products and services are becoming system providers, goods are being replaced by data, and machines by platforms.
 
Social adaption
In the past, humans used to be regarded as resources. Now, humans with all their resources take centre stage. The concept of Industry 5.0. does exactly that. It places the human being at the centre to promote and foster diversity, different talents, and activities. Many companies have already initiated a transformation process because employees nowadays attach more importance on meaningful work. They believe that they can make a difference when it comes to resilience and sustainability.

Beyond globalisation – Geopolitical transformation in the spotlight

The upcoming release of HORIZON will concentrate on the geopolitical transformation and therefore looks at all its challenges from various angles.
 
New political world order
Does the war in Ukraine show us the dramatic face of a new political world order and how does this conflict at the very centre of Eastern Europe disrupt our economic basis?
How will the global trend of bloc formation between democratic and autocratic countries influence companies’ global business activities in the future?
What is the risk of technology being abused as an instrument of power and how could this affect companies?
How will the increasing conflict between the USA and China influence global economic relations?

Energy crisis
Blackout and a cold winter – how can we prepare for a total outage?
Will the current shortage of natural resources ruin Europe’s industry or will an ambitious energy transition turn Europe into a role model for a green global economy?

Supply chain dilemma
Will the geopolitical transformation result in a new era of offshoring, or will regional supply chains and increasing investments in circular economy boost independence and resilience?
How will China´s rise continue – considering its growing regional influence along the new silk road – and what will be the effect of its strategy of isolation as a result of its zero-tolerance pandemic policy?
Is the conflict over Taiwan’s independence a ticking time bomb for the global economy?

Loss of wealth
Will double-digit price increases lead to a decreased standard of living over the long term?
Does high inflation increase the risk of social riots in Europe?
How do these circumstances influence people’s work-life balance and their work attitude?
What does a new wave of migration mean for European companies and their DE&I (Diversity, Equity, and Inclusion) agenda?
 
It is indeed a difficult and challenging situation that raises many most pressing questions. We need to discuss them, their impact on the transformation of the risk landscape as well as possible solution scenarios.
 
Stay tuned!

Georg Winter

CEO

T +43 664 962 39 06

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GrECo Christmas Charity

For many years we have been refraining from giving Christmas presents to our clients and partners and instead are supporting projects within our GrECo Foundation.

The GrECo Foundation supports socially disadvantaged children and young people in various learning projects, such as supplying study materials, afternoon care, workshops and excursions in 17 countries.

The team of GrECo wishes you a Merry Christmas and a Happy New Year!

Licht ins Dunkel

Licht ins Dunkel is a nationwide traditional Christmas charity in Austria that helps children and young people in need. We have supported these activities for many years.

SOS Kinderdorf

SOS Kinderdorf

GrECo Foundation supports SOS-Kinderdorf/Rat auf Draht.  This project is very close to the heart of the GrECo Foundation. In difficult times, it is above all children and young people who need support and a sympathetic ear for problems. We are happy to contribute again this year.

ART GrECo Scholarship

For the 3rd time, the GrECo Foundation is happy to fund scholarships for talented students, an initiative by our colleagues from Poland.

Education and the promotion of extraordinary talents will be the key to the future of employment markets. Thus, we focus all our projects on supporting children and youngsters in their learning process.

Ö3 Wundertüte

Ö3 Wundertüte

We have donated used company mobile phones in the “Ö3 wonder bag” and thus disposed of them in an environmentally friendly manner and following the law.

The money from device recycling goes to the emergency aid funds of Licht-ins-Dunkel and Caritas, thus helping families in need in Austria. In addition, thanks to this support, permanent jobs are created for people with fewer job opportunities.

Support for Ukraine

The GrECo Foundation has provided emergency assistance to all those colleagues who wanted to leave Ukraine. Many of our colleagues from GrECo markets bordering Ukraine were helping to organize accommodation and the provision of necessities.

Colleagues from GrECo Holding are (still) in an ongoing exchange with the Ukrainian colleagues and are supporting the coordination of the measures.

Support for Ukraine

Breakfast at the Caritas Gruft for homeless people in Vienna

Our IT-colleagues had an early start on this cold December morning to prepare and serve breakfast to around 80 homeless people who seek shelter in Vienna’s Gruft that is run by the Caritas in Austria. The GrECo Foundation served freshly baked Croissants and provided several winter care packages for the upcoming months.

Reverse Advent Calendar

Every year, our colleagues donate generously towards our Christmas project. This year we are collecting health and beauty products for the women and children at Haus Immanuel in Vienna.

Gabriele Andratschke

Head of Group Human Resources

T +43 664 962 39 18

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Supply Chain Risk Management in the Food and Agriculture Sector – Keeping Flexibility and Financial Resilience

Supply Chain Risk Management in the Food and Agriculture Sector - Keeping Flexibility and Financial Resilience

One of the key questions nowadays is how to stay agile in an ever-changing supplier and customer environment? In other words: How to get the right product to the right customer at the right time in the right place while continuing to be profitable, environmentally and socially compliant?

COVID, the war in Ukraine, the gas crisis and more have exposed the fragility of many industries.  Our food supply chain is no exception. What does the future hold for us and are we ready to successfully face new challenges? The more immediate question we have to ask ourselves is: “How can we increase flexibility and financial resilience in an ever-changing economical and geopolitical environment?” Let’s take a closer look at this issue and how to better deal with it:

Sustainability in the Food Supply Chain

The Food and Agriculture Organization of the United Nations defines the food supply chain as consisting of all stakeholders who participate in the coordinated production and value-adding activities that are needed to make food products.

Food Supply Chain

Source of the chart: https://www.fao.org/3/ca8308en/ca8308en.pdf

The food supply chain covers agricultural upstream and downstream sectors from the supply of agricultural inputs (such as seeds, fertilisers, feeds, medicines or equipment) to production, post-harvest handling, processing, transportation, marketing, distribution, and retailing.  
 
A sustainable food supply chain:

  • should be profitable throughout all its stages (economic sustainability),
  • has broad-based benefits for society (social sustainability),
  • has a positive or neutral impact on the natural environment (environmental sustainability).

Spotlight on Supply Chain Disruption Risk Management

The recent agitation in societies caused by COVID-19, Russia’s aggression in Ukraine, the gas crises, climate change, etc., have prompted governments and corporations to pay more attention to supply chain disruption risk management. This is due to its obvious negative consequences, such as loss of net profit and increased costs for restoring supplies to normal.

The complexity of the supply chain requires that risks be grouped as follows:

  • Supply Risks: Impacts inbound supply, implying that a supply chain cannot meet the demand in terms of quantity and quality of parts and finished goods (supply disruption).  
  • Demand Risks: Impacts elements of the outbound supply chain where the extent or the fluctuation of the demand is unexpected (demand disruption).  
  • Operational Risks: Impacts elements within a supply chain, impairing its ability to supply services, parts, or finished goods within the standard requirements of time, cost, and quality. Transportation disruptions are one of the most considerable operational risks.
Risk in global supply chains

Source of the chart:  https://transportgeography.org/contents/chapter9/transportation-and-disasters/supply-chain-risks/

In order to effectively manage the risk of disruptions in the supply chain, special risk management procedures should be implemented in companies:

Step 1: Assess the risks (suppliers, buyers, weather-related events, foreign economic instability, raw material shortages, blackouts, military actions, actions of the government, social unrest, etc.)

Step 2: Quantify the risks (likelihood and severity, risk mapping)

Step 3:  Build a response plan to contingencies (“If X happens, then we will respond with Y.”) and define roles and responsibilities in this action plan.

Step 4: Develop a supply chain continuity plan (determine critical and major suppliers and logistics routes, qualify alternative suppliers and shipments)

Step 5: Further monitor supply chain risks, carry out supply chain continuity plan modifications and reporting

The vessel, blocking the Suez Canal in 2021

The vessel, blocking the Suez Canal in 2021

Stay Agile in the Food Supply Chain   

One of the key questions nowadays is how to stay agile in an ever-changing supplier and customer environment? In other words: How to get the right product to the right customer at the right time in the right place while continuing to be profitable, environmentally and socially compliant?

Here are some practical key points and ideas for increasing the flexibility of the food supply chains:

  • Go digital wherever possible: collect, process and display in-time data
  • Ensure optimum levels of visibility and transparency across the organization by providing more information to optimise operations 
  • Automate the less time-consuming manual processes
  • Hold extra inventory
  • Make shorter-term plans 
  • Reduce the variety of products
  • Switch to new packaging – smart packaging, large multi-serving formats, modular packaging solutions
  • Buy from domestic or local suppliers where possible to increase the ability to transport goods in an efficient and cost-effective manner
  • Establish and foster solid relationships with strategic suppliers.

Insurance – Key Element to Counteract Food Supply Chain Disruptions  

Insurance is a tool that limits financial losses when a risk has become reality and has disrupted the supply chain, resulting in a loss of net profit, an increase in its mitigation costs and contractual penalties.
 
As a rule, standard property insurance covers business interruptions, caused by physical damage to the enterprise or physical damage to its suppliers or buyers (extended coverage).   In any case, it should also contain an “on-site element”, i.e. the damage should arise at the site of the party specified in the insurance contract.
 
In order to partially fill this gap, clients are advised to consider investing in special tailor-made solutions, such as combined stock-throughput and trade disruption coverage or parametric insurance.
 
Combined stock-throughput and trade disruption covers the entire value chain: from the delivery of goods from suppliers, through their processing at the insured party’s premises, to their delivery to buyers, including both transit and storage periods. A stock-throughput placement provides compensation for material damage to the transported or stored property.
 
The additional trade disruption insurance covers loss of net profit, increased expenses and contractual penalties resulting from direct damage to property and unexpected events that impacted on logistics and/or happened to goods along the way (fire, lightning or explosion, natural disasters, blockage of waterways, harbours, airport, roads or railways; breakdown of a vessel; confiscation, expropriation, deprivation, embargoes; sanctions; political interference; strikes, riots and civil commotion, terrorism border closures; or other triggers subject to the agreement of underwriters). 
 
Parametric insurance insures a specific weather or statistical parameter, which should correlate well with the quantity or quality of the goods one buys or sells. For example, to produce a planned amount of vegetable oil, an oil-crushing plant needs seeds to be processed. The factory relies on farmers who grow such crops. In the event of a drought, there will be a shortage of harvested seeds, which, in turn, results in a reduced production of vegetable oil. To mitigate and balance such losses, the oil crushing plant will be insured against soil moisture deficiency (drought index) or an area yield index. The insurance contract is triggered when the insured index reaches a certain value.

Maksym Shylov

Group Practice Leader
Food & Agriculture

T +48 22 39 33 211

Chojnacki Jacek

Jacek Chojnacki

Dyrektor Regionu Food & Agri
Broker Ubezpieczeniowy

T  +48 609 600 960

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Do Health & Benefits Really Matter to Employees?

Employers need to go back to basics and look at the structure of the benefits they offer and determine if it must be changed or stepped up. Now is the time to do it.

Steps employers can take to future-proof benefits

For employers with international offices or mobile employees, the wider benefits strategy must match the wider HR and Benefits strategy, corporate objectives as well as workforce demographics. Any required local changes must be assessed as well.
 
The Health & Benefits being offered must ideally reflect changing working patterns, age differences in the workforce, as well as individual country requirements affecting mobile employees, expatriates, and teams in international offices.

Do Health & Benefits really matter to an employee?

Absolutely yes, but with different emphasis. A recent report by edays showed that 75% of employees are more likely to stay with their employers because of a great Health & Benefits programme. Considering a new political world order, employee cross-border migration and decreased standards of living, employers need to recognise that their Health & Benefits, together with corporate culture, are ways to differentiate themselves, to compete for talent, retain staff and better engage their workforce.
 
At the same time, employers need to keep in mind that the success of any benefits programme largely depends on benefits being tailored to the needs of a diverse workforce.
 
As no workforce is the same, benefits that matter to one group of employees may not matter to another. Millennials for instance may be most concerned about the debt they have to pay; older employees will focus more on whether they have enough for their pension. TeamStage reported that millennials will represent 75% of the global workforce by 2025.
 
Employers are challenged to find new and innovative ways to engage this group of employees, while making sure the Health & Benefits they offer cater for the needs of the entire workforce – a huge challenge for HR. A sustainable Health & Benefits programme that is fit for purpose will be an asset for the success of the business.

Is remote and flexible working here to stay?

Yes, and no. I am rarely one to sit on the fence but in this case, it is not a simple answer. Adding more flexibility to the way we work will enable employees to create the work-life harmony that works best for them.
 
Nevertheless, we cannot work remotely in every sector. Remote and flexible working models thus need to be well-managed. No doubt, the move towards remote working has presented employers with a new opportunity to address the needs of a multi-generational workforce, but it has also created a huge challenge and in some sectors a move away from “tradition” where employees came to the office every day and were “present” to a new way of working, sometimes not just from their home, the coffee shop, library, or on a beach.
 
We are faced with up to five different generations of employees in the workforce: from those in their 20s to those who are still working into their 70s and beyond. As a result, HR teams have been reviewing their long-term approach to flexible working and related policies. Talking with many HR leaders, it has become clear more flexible Health & Benefits strategies could help employers retain their ageing workforce and attract new talents.

What role can an adviser play?

The first step is for employers to better understand their working environment, culture and people. Culture plays a key role. It provides employees with a solid foundation, helps build trust and a safe working environment. Besides that, employers have started to recognise that the value of an effective Health & Benefits offering goes far beyond the traditional objective of recruitment and retention. It also goes far beyond traditional insured benefits, rather it focuses on wellbeing, flexible leave policies as well as wider fringe or lifestyle benefits.
 
The right benefits strategy, a clear direction as well as practical solutions, will help employers attract the best people and look after the needs of their workforce. Health & Benefits will become more employee-led. More and more employees are wanting to select the benefits that suit them, meaning employers need a multilevel benefit system where people can pick and choose – hence the need for the right technology and digital solutions.
 
Globally, we are all feeling the financial squeeze on our income. Now, more than ever, employers need both support and sophisticated solutions, coupled with expert and professional advice to ensure they have the right benefits, strategy, and direction in place to meet the changing needs of their employees and business.
 
Employers are already looking beyond insured benefits at other factors which are fast becoming part of the wider HR and organisational strategy. Factors that impact decisions concerning benefits design and strategy, such as: ESG (climate, DE&I and Governance), alignment of benefits with corporate objectives, employee value proposition and achieving work-life harmony across their domestic and international workforce.
 
The time is now for employers to invest their benefit budgets wisely and in areas where the impact will be felt most! A one-size-fits-all Health & Benefits package is no longer appropriate, presenting HR with one of their biggest challenges!

The article is written by Adam Riley.

Preslava Gencheva joins GrECo

Preslava Gencheva

Deputy Group Practice Leader Health & Benefits

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Transformation in Global Insurance

Transformation in Global Insurance

After a series of big mergers at the end of the last century and a period of increasing financial stability, global insurance is now heading for a time of disruption and changing parameters: Climate change, pandemics, war and sanctions are becoming a part of the Western world. Inflation, digitisation, demographics and changes in work behaviour are among the most important factors affecting an industry that is still solidly based on 19th-century economic principles. How will global insurance and reinsurance adapt to new challenges and navigate the stormy waters of the 21st century?

It would be an exaggeration to speak of a “historical turning point” in the insurance industry, a term politicians nowadays use to describe global changes related to the war in Ukraine. Rather, we see a constant flow of changes having been made possible by technical improvements – both in know-how and advances in IT – as well as by management decisions, some of which set new directions in the development of this industrial sector.

A quarter of a century ago, when insurance managers were unsure if their clients’ data would survive the turn of the century because computers might not be able to recognise the new millennium, as the number ’99’ denoted contracts without a specific expiration – a phenomenon called the Y2K bug – there was even greater concern with respect to the level of operating costs. Too many employees administrated contracts and sold insurances only with the help of heaps of paper because IT was far from being fully automated. The answer to this was to merge companies to at least reduce overheads by creating a greater span of control. Statistics based on past premium and loss ratios, the “burning cost” method only considered past losses, and model calculations of future loss scenarios were too complicated and insufficient. Companies could only compensate for this situation with relatively high premiums, lower average wages, and substantial capital gains due to higher interest rates.

Technological transformation of the insurance world

The rapid development of IT office tools in the first years of the new century brought about a revolution (not only) in industrial risk calculation. For the first time, NatCat scenarios could be comprehensively evaluated and forecasts made, at least for catastrophes due to weather events. The tremendous development of access to the Internet made data collection from all parts of the world much easier. This has brought stability to the portfolio as insurers have gained a better understanding of the cost of claims that might be expected in the future.
 
Of course, losses from natural catastrophes increase further, there is a higher frequency and extent of individual events due to climate change and the concentration of insured goods in exposed areas, such as densely populated settlements on the coasts. These developments can still be included in the calculation of premiums. However, the weather phenomena that have increasingly occurred in recent years are a cause of great concern because their effects are longer lasting than those of individual events. First and foremost, it is the rise in temperature, especially in large cities, and large-scale droughts that claim numerous lives and destroy property every year. Especially in the case of agricultural risks, the limit of global insurance capacities is being reached. Hence, other means of compensating for damages must be found, often by the states themselves.
 
The insurance industry is therefore quite willing to adopt the efforts needed to achieve the Paris climate goals and other measures specified by EU legislation, such as the Taxonomy Regulation. For the time being, the leverage consists in restricting investments in companies that do not (or no longer) comply with the taxonomy as well as in refusing to insure such risks – the most typical example, at the moment, is coal. This strategy, known as “Net-Zero”, aims to encourage the transition to new processes for generating energy and new production methods in various industrial sectors.

Increased willingness to take over new risks

In the new millennium, great progress was also made in reducing the risk of fire through new, safer industrial processes, but above all through a greater awareness in companies for fire protection measures. This was one of the main drivers of the so-called soft market over the past two decades, which was not only a result of the commercial strategies of insurers. It is astonishing that this market behaviour has lasted for so long, despite insurers facing a constantly declining income from investments. At the same time, the results from sole insurance activities, defined by the “combined ratio” (= premium less claims and costs), have constantly improved.
 
This has also increased the willingness to take over risks that were previously considered uninsurable or very difficult to insure. These include the aforementioned natural hazards, including earthquakes, but also an ever-increasing expansion of coverage in business interruption insurance to cover risks associated with supply chains. It now seems that there are new restrictions concerning either the cover itself or individual premium corrections that are still pending. Hence, we may see a return to the hard market.
 
These transformation processes in technical, risk-related areas are not yet that spectacular. In fact, insurers are contemplating whether or not they should continue to have the same structure as in the past – as large, personnel-intensive companies that handle the entire business process from the first customer contact to the settlement of claims, from the maintenance of large office buildings to comprehensive processing of their own data. A number of external factors are responsible for the fact that it is more likely that these organisations will be split into small special units with increased outsourcing. In the ​​ core business, capacities are already being shifted back to special companies and outsourced underwriting agencies. Other areas, such as building management or data processing, are also suitable candidates.

Insurance transformation and Covid-19 pandemic

The Covid-19 pandemic – which has led to different financial burdens on individual insurance markets – has fundamentally changed the professional world through the widespread use of home office work solutions. Insurance is a particularly labour-intensive sector of the economy, but it has the great advantage that most of the work does not necessarily have to be carried out at the location of the company. Thus, home office work solutions will, at least partially, become the new norm in the insurance business of the future, with all the consequences, such as fewer office space requirements, more powerful IT systems and a stronger focus on social issues on part of management.
 
Even before the outbreak of the pandemic, there were intense discussions as to whether the sales process could be shifted to the Internet, just like in other business sectors, which would mean a drastic reduction in sales staff. Findings thus far show that the insurance customer likes to search for information and offers electronically, but still prefers the advice of a physical person when concluding an insurance contract. This can be explained by the complexity of insurance products as well as by the fact that most people interested in insurance would rather entrust their sensitive data to a person than to a machine. However, we can expect that future generations of “digital natives” will increasingly conclude their insurance contracts online. The insurance sector is therefore also investing in expanding its online options, for the time being primarily in products that require little explanation. The number of such products might increase in the more traditional or core areas of private insurance as well. The widespread shortage of skilled workers could fast-track this transformation.
 
However, insurance advisors do not have to worry that their work and jobs will become obsolete. On the contrary, providing expert advice about products will still remain their main task -, especially in corporate insurance, where the role of the advisor will gradually shift to ​​risk evaluation and risk management. Additionally, they will also continue to provide certain ancillary services.
 
As mentioned above, insurers have significantly increased their willingness to take on new and additional risks in recent decades. In addition to the property insurance risks, new offers in terms of so-called Financial lines, covers such as D&O and Cyber, and even more special solutions are now a standard, not just for large companies. Currently, some rethinking seems to be taking place, partially initiated by the war in Ukraine. Insurers are rediscovering the possibility of saying “no” to certain risks across the board. An example is the exclusion of entire territories from cover, such as Russia, or the withdrawal from certain exposed sectors, such as Cyber. The principle that “everything is insurable as long as there is an adequate premium for the risk” is overridden when other fundamental factors such as the principles required by governance and compliance come into play.
 
Other challenges, such as the current inflation and the continued low investment income, which will probably also lag behind inflation in the near future, will not be discussed here due to a lack of space. These challenges have either subsisted for a long time or they keep coming back. The insurance industry has learned to live with them and is still able to report very good economic results every quarter.
 
In summary, the transformation in the insurance industry can best be described with an image: The market participants are developing from large tanker vessels, which operate with many sailors and use nautical charts made of paper, to fleets of small, largely automated ships, which are heading towards their ports of destination with the help of GPS .

The article is written by Andreas Krebs.

Paul Spittau

Head of Group Carrier Relations & Insurance Mediation

T +43 664 537 17 42

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Покана за полудневен семинар

transportation and logistics

ТЕМА: Отговорност на превозвача/спедитора (CMR) и застрахователни решения – Рискове и практики CMR Конвенция!
Дата:  23.11.2022 / Време: от 09:00 до 13:00 / Място: София, Хотел Новотел 115 N, бул. „Цариградско шосе“, 1784 м. Къро, София
ЛЕКТОР: Г-н Отмар Тума, Тренер в ГрЕКо Холдинг Виена

Имаме удоволствие да ви поканим на семинар  по застраховка Отговорност на превозвача/спедитора (CMR) организиран от Застрахователен Брокер ГрЕКо България.

Срещата е насочена към транспортни и спедиторски компании, които целят да застраховат всяка една рискова експозиция и особено рискове като Груба небрежност на водачите на МПС по чл. 29 от ЧМР конвенцията / СМР /, т.е. да защитят бизнеса си от всякакви основателни и неоснователни претенции!
Участието е напълно БЕЗПЛАТНО, включително и по отношение на предвидения от организаторите обяд, кафе паузи и т.н.

Предвидили сме следния план за провеждане на представянето в София на 23.11.2022:
09:00- 9:15 Посрещане
09:15-10:00 Първи блок – Отговорността не се отнася само до глава IV СМР
Ще се дискутира обхвата на отговорността на превозвача/спедитора, като ще се обърне внимание на членове от Конвенцията извън рамките на Глава IV от СМР, по които превозвача/спедитора е отговорен.  
10:00-10:45 Втори блок – Условията на Транспортна заявка и потвърждение на Транспортна заявка
Ще ви запознаем с нашите форми на заявки и отговор на такива, като насочим внимание към критични моменти при приемане на поръчки за превоз на стоки.
10:45-11:00 Въпроси и отговори за първи и втори блок
11:00-11:15 Кафе пауза
11:15-12:00 Трети блок – Махалото, което се люлее между чл. 17, ал.2 и чл.29 СМР (от неизбежни обстоятелства до умишлено нарушение)   
От освобождаване от отговорност съгласно чл. 17, ал.2 СМР до неограничена отговорност съгласно чл.29 СМР границата на отговорност на превозвача/спедитора изразена финансово може да бъде от 0 лв. до фактурната стойност на стоката. А фактурната стойност на стоката в повечето случаи е неизвестна до момента на настъпване на събитие.
12:00-12:45 Четвърти блок – Системата за отговорност СМР в светлината на доказателствената тежест – правилата на чл.18 СМР
Доказването на причините за липсата, повредата или забавата е в тежест на превозвача или правоимащия? Ще се дискутират примери от практиката.
12:45-13:00 Въпроси и отговори за трети и четвърти блок
13:00-14:00 Обяд
 
Надяваме се на интерес от ваша страна, с оглед на факта, че този вид семинари вече са традиция и ги организираме по два пъти на година, като и този път ще се радваме на вашето активно участие в дискусия!
Оставаме в очакване на потвърждение за участие с уточнение на броя хора до 21.11.2022 на мейл k.petrov@greco.services !

Kiril Petrov

CAM Transportation & Logistics AM-Team BG

T:+359886055656