Focus on employee benefits trends in the Chinese market

A fascinating day at the MAXIS event in Beijing

We were delighted when our local insurer, ICBC AXA and our partner PARIMA (Pan-Asia Risk and Insurance Management Association) joined Juliet Kwek, Asia Pacific Regional Director, her team and a large number of multinational clients at the Grand Hyatt in Beijing on 8 August 2019.

We asked several industry experts to come and talk to our guests about trends in the employee benefits space with a special focus on insurance captives and the Chinese market. Over the last few years emerging risks have resulted in a number of new challenges for multinationals and insurance captives are one of the solutions organisations can take advantage to help manage these risks.

Keith Xia, Chief Risk Officer of Onehealth Healthcare China inspired the audience with his views on captive programmes and how to work with CFOs to implement these solutions. He gave recommendations on writing EB captive programmes and advised as to what HR should take into account when presenting such a business case to risk officers.

Shiwei Jin, the Global Programme and Captive Regional Director from AXA XL, explained the benefits of reinsuring global programmes through captives to control cost, strengthen governance and access better quality data.

Edward Wu, Managing Director, Captive and Mutual Practice, Willis Towers Watson, China, also gave a presentation on the key roles of captive such as risk management, insurance centralisation, insurance cost reduction, and the efficient of claims management. He focused on the Asia market and mentioned the four major cities to focus on: China, Hong Kong, Singapore and Labuan.

Speaking of the future, our guests also heard from Dr. Zhao from the Peking University who came to talk about big data strategies for insurance companies.

And last but not least, Juliet presented the findings of the latest MAXIS whitepaper on health and wellness at work and interviewed Enoch Li from Bearapy to discuss the importance of mental wellness at work, giving a fascinating insight about the cost of poor mental health for companies.

It was a great opportunity to catch up with our Beijing based clients and we are looking forward to organising more informative and productive events in the region very soon. We’ll be in touch!


Parima’s Baron supports affirmative cyber but warns insurers on costs

Franck Baron, group deputy director of risk management and insurance at International SOS, and chairman of Parima

Risk and insurance managers in Asia-Pacific and worldwide are facing tougher renewals with their insurers in coming months than have been seen for a very long time, and can expect serious conversations about cyber cover as the insurers seek to remove it from traditional lines and set up standalone policies instead.
Franck Baron, chairman of Parima, told Commercial Risk Asia that he is not surprised insurers are working to tackle so-called non-affirmative cyber in other lines of business.

He believes that on the whole, this is good news for insurance buyers because it will give more clarity and certainty when the claim hits.
But Mr Baron stressed that any previously non-affirmative cyber cover that insurers want to exclude should be “factored in at renewal pricing negotiations”, with reductions in costs for buyers.

A growing number of insurers and insurance markets have announced plans to tackle silent, also known as non-affirmative, cyber cover in other lines of business. Silent cover is where no cyber exclusion exists but there is no affirmative cover either. This leaves neither insureds or insurers knowing where they stand and is leading to coverage disputes.

Following the 2017 NotPetya and WannaCry cyberattacks, cases have emerged in which property insurers are denying coverage based on war exclusions in their policies. There are ongoing disputes between Merck and its insurers, as well as Mondelez and Zurich Insurance.

In the UK and London market, this is being partly driven by regulatory intervention from the Prudential Regulation Authority. Lloyd’s has told its syndicates, including Lloyd’s Singapore, that they must make clear whether they include or exclude cyber risk in property policies by the 1 January 2020 renewals. They will then have to do the same in other lines shortly after. The German regulator Bafin is also reportedly taking action.

There is also growing, parallel action on this topic among the big, global company insurers. Kicking off with Allianz Global Corporate Specialty late last year, more and more have publicly stated they are removing non-affirmative cyber cover. There is action going on across the board and the direction of travel is clear.
Parima’s Mr Baron, who is also group deputy director risk management and insurance at International SOS, argues that relying on “bits and pieces of cyber coverage from various lines of insurance is dicey at best”.

He is therefore in favour of insurers tackling silent cyber cover. He thinks this will help buyers clarify the need for dedicated cyber insurance, which he suggests can now deliver.

“After years of maturation, it is more than time to secure a fully dedicated programme for these risks,” he said. Mr Baron said that when organisations properly assess cyber risk, they “quickly understand that in most cases they are going to need a dedicated coverage to support incident response and financial consequences”.


Baron calls for better support from brokers on employee benefit risk

Franck Baron
Franck Baron, group deputy director of risk management and insurance at International SOS, and chairman of Parima

Brokers, and as a result insurers, are failing to properly support risk managers as they move into the employee benefit space and increasingly want to place such risks in their multinational insurance programmes, Franck Baron, chairman of Parima, told those gathered for a Commercial Risk conference.

While being careful to note that risk managers also have much room for improvement when it comes to managing and transferring employee benefit risks, Mr Baron called for more help from the insurance market to help his industry step up to the plate.

Mr Baron was speaking at our ‘Global Programmes Consistency and Certainty 2019’ conference in London – partnered by AIG, Allianz, AXA XL, Axco, Charles Taylor, Clyde & Co, Strategic Risk Solutions, Willis Towers Watson and Zurich.

At the event supported by Parima and Airmic, he told the audience that managing employee benefit risk provides his profession with a great opportunity to raise its profile and prove its worth.

Risk managers have a big opportunity to help human resource managers deal with risk financing aspects of their job, he said. Helping companies transfer these risks to multinational insurance programmes is also a very good way of getting the c-suite’s attention on, and commitment to, such solutions, he added at the event that attracted over 150 people from the world of risk and insurance.

However, Mr Baron said that brokers are not providing the help that risk and insurance managers need to deal with human resource and employee benefit risks.

“They are not helping because if you look at the way the main brokers are structured – Marsh and Mercer, Willis Towers Watson, Aon and Hewitt – they not yet organised in a way that can provide us with a consistent and connected support, mixing both human resource consultancy parts of the business to the broking insurance placement part,” said Mr Baron, who is also group deputy director of risk management and insurance at International SOS.

“It is difficult to get people to link their expertise and provide one solution,” he added.

Mr Baron said risk managers are often being forced to bring the two sides of these businesses together to get the information and support needed to understand the big picture and potential solutions.

He added that the lack of coordination from brokers in the increasingly critical area of people risk means insurers are falling short too.

“Insurers’ preferred distribution channel is brokers. So if the brokers are not helping, insurers are not helping, because they are using brokers to provide their solutions,” he said.

Mr Baron warned that many multinational employee benefit insurance programmes simply aren’t working the way they should. He explained that the majority of his company’s employee benefit and medical programmes around the world are fully reinsured within its captive. “But we are struggling to get brokers and insurers to help coordinate all the different markets and jurisdictions we are integrating into our programmes,” added Mr Baron, before asking the insurance industry for more support.

“I am not here to bash brokers and insurers. As risk managers, we have our own challenges where we need to improve. But my message to you is: please help us to do what we are supposed to do so we can all benefit,” he said.

Adding: “If we are not supported by the insurance industry, we have problems. If we are supported by you, it will be less challenging. Keep in mind that risk managers are seen internally as being as good or as bad as the way the brokers and insurers are working. So if my insurers and broker are not working well, I am seen as being part of an inefficient food chain.”

Also at the event, strong>Marsh’s Praveen Sharma called on the London insurance market to come together and agree on interpretations of insurance regulations around the world to drive consistency in global programmes.