Insurer consolidation – a challenge to the development of technical staff

MAP Training believes passionately that an insurer’s proposition is only as good as the capability of their people to deliver it. In a market where there is enormous complexity and increased regulation, the insurance industry faces many challenges in maintaining, and ideally increasing, the technical capability of its people to improve business performance and provide competitive advantage.

One of the key challenges the market faces is the amount of constant change – and of the highest profile at the moment in 2015 is insurer consolidation, in the form of the number of acquisitions and mergers announced, completed or under discussion – think XL/Catlin, Fairfax/Brit, Mitsui/Amlin, ACE/Chubb (the Zurich/RSA takeover that was under consideration until recently) – to name the major ones. Not to mention the consolidation taking place in the broker market at the same time.

Whilst the focus of the newspaper and insurance press is naturally on purchase price, value for shareholders, job losses, reduced choice/capacity in the marketplace and loss of prestigious brand names – from a training and development angle it is also valid to ask: –

“What could be the impact of this consolidation on technical capability – either within the industry or within a specific merged company?”

The impact on technical staff in an acquisition/merger is perhaps the most obvious – uncertainty, duplication of roles, redundancy, loss of older/experienced heads, new roles for those remaining, etc.

The technical challenges for a newly merged company

However, also of real interest is the challenge a newly merged company throws out through combining two different business strategies – with some of the real pinch points being firmly in the technical arenas such as portfolio management and underwriting. Jumping immediately to mind for technical management are questions such as:

How do we deal with different underwriting strategies and risk appetites?
Where is there synergy and where is there conflict?
Do I understand this new portfolio or different product class?
Do we combine or leave separate the different Pricing approaches?
What do we do about the differing policy wordings, should there be a reissue programme?
Are there new accumulation/aggregation issues?
How do we maintain adequate control and compliance?
What has this done to my data?
How do we keep customers and brokers on board?
Where are we most exposed to a loss or scenario that would hit our reputation?
How can we improve our management of risk to the satisfaction of the regulator?
What are the reinsurance needs of the newly consolidated company?

In essence right at the centre of such technical challenges induced or magnified by acquisition/merger are two core skills requirements:

Portfolio Management – that is the ability to manage a portfolio of business in a proactive way across all insurance functions to ensure delivery of the business result
Management of Risk – that is the ability to identify, measure, manage, monitor and control, reduce or eliminate all types of business risk (in particular those from a technical perspective relating to underwriting, catastrophe, reserving and emerging risks). At a time of uncertainty excellent corporate governance procedures must continue to be in place to ensure that exposure to loss and consequential reputational and investor damage is minimised.

How we can help

MAP training is a specialist training company with a focus on technical insurance skills. We have developed a template for technical courses on Portfolio Management and another for courses on Managing Risk which we bring to insurer clients and use to build tailored material specific to that client’s needs, business strategy and indeed merger/acquisition situation. All courses and technical training carried out are practically based on case studies and learning situations so that personal development is embedded for use back at the workplace.

Train tomorrow’s experts.

To discuss technical training needs please get in touch.