Frank Streidl: Zurich’s Commercial business in great shape
Speaking to Insurance Post, Frank Streidl, UK head of commercial insurance at Zurich, said that market-wide growth aspirations fuelled by the hard market of recent years have meant that Zurich has had to be on its guard.
“We’ve had a lot of stability in our underwriting team – which is not a given in this day and age – and a lot of stability in our risk appetite and our book,” he said, reflecting on 2023 – his first year at the helm of Zurich’s commercial lines business in the UK.
Formerly UK head of energy, marine and construction, Streidl took up his current role in January 2022, succeeding Rob Kuchinski.
He added: “We see existing carriers increasing their risk appetite and capacity in the market, and we see new carriers coming into the market. We also see existing carriers exploring new lines of business.
“Because we’ve been so successful over the last few years, it feels sometimes we’ve had a bit of a target on our back. People tried to copy our model, people tried to take our people, and competitors tried to close the gap between them and us.
“That puts us in a difficult situation because we’ve had to go on the defence, and we tried to do that by being as close as we possibly can be to our distribution channels and our customers.”
Streidl was alluding to Zurich’s 2016 merging of its global corporate business with its other commercial lines businesses to form a single global commercial lines division led by James Shea.
Turning market
In the wake of the competition of recent years, Streidl now sees parts of the market “slowly but steadily turning” against insurers in terms of the direction rates are headed in - for example, directors’ and officers’ insurance and cyber insurance.
“I wouldn’t call the areas problematic, because they are profitable, but they are ones to watch,” he said.
“Coming out of a hard market, you will find that you will have ‘opportunistic writes’, as we call them, in your book.
“Those are accounts that you wouldn’t naturally pile into in any normal circumstances. But because of the advantageous rating environment, you can sometimes offer more capacity or capacity on accounts that wouldn’t qualify as core appetite as such.”
Streidl said that these risks would need to be met with underwriting discipline and a firm eye on maintaining profitability and predictability for customers in how Zurich operates.
Regarding D&O, he said that the insurer was offering long-term two-year or three-year deals rather than annual covers and working with customers to mitigate the risk of losses.
Zurich is also looking to improve how it transacts with customers through the development of its 'digital workbench', which Streidl characterises as the insurer's answer to London market modernisation.
It aims to facilitate more user-friendly data transfers between Zurich and brokers and customers, as is set to come to fruition later this year.
"We're quite optimistic that this could potentially go live around Q3 of 2024," said Streidl. "It's a phased approach but we've already put APIs in place with WTW, for example."
Net zero acceleration
Streidl highlighted renewable energy as an area in which he expects to see strong growth in 2024, alongside construction and marine and transportation - incidentally all areas he oversaw in his previous role.
"Accelerating the transition to net zero is very much at the forefront of my mind," he said.
"It's something that as a human being, a father, and as an ex-energy underwriter is very close to my heart."
Streidl said that Zurich has a commitment to sustainability that was “core” to how it operated.
“As opposed to some of our competitors, we do not hide behind the umbrella of a big outfit in Lime Street that allows the Lloyd’s syndicates to operate in their own ways,” he said. “We’ve been very public about our values.”
Zurich has a group-wide target to reduce greenhouse gas emissions associated with its underwriting portfolios to net zero by 2050.
The insurer has pledged to stop insuring companies that plan to develop new coal projects and has committed to phase out insuring coal by 2030.
He went on to say that while we are still firmly in the early stages of the energy transition, the energy insurance market is evolving to meet changing demands.
“When it comes to insurance products, whenever there is a need to insure, there will be markets found in the industry to do that. I’m convinced of that. It’s a very proactive industry,” he said.
“Some of our competitors hide behind a lack of data to properly assess risk and price risk successfully.
“We lean heavily on Zurich Resilience Solutions, which is one of our fastest growing businesses within the Zurich empire, to help us assess the technical side of the risk and they are incredibly helpful for us.”
He added: “We don’t want to lead by exclusions. We really want to accelerate the transition to net zero.
“We need to leave the days of long lists of exclusions and questionnaires and all that behind us. I don’t think it’s helpful for our customers.
“We focus on key industries, which we find will have the greatest impact.”
He said that the way Zurich goes about developing new products is led by engagement with customers.
“We will not just develop products into thin air where we don’t know whether it’s required,” he said.
“We feed off our customers to see what they need as products and then hopefully provide a viable solution for them.”
One forthcoming development is a facility for insuring hydrogen projects called “Celsius 1.0”, which has been developed in partnership with Aon and which Zurich is the leading insurer for.
While the facility is yet to launch, Streidl said it was the result of almost two years of work and was a “ground breaking” development.
Cyber
Another area where insurers have seen strong growth in recent years is cyber.
“You’d be surprised how big the cyber book is already. I was surprised when I saw the growth patterns there,” said Streidl.
He went on to say that Zurich was taking a cautious approach to growth, noting that cyber was difficult to underwrite.
He said that Zurich is more limited by its own appetite than that of reinsurers to shoulder a portion of cyber risks.
“I completely see what the reinsurers are doing because if there’s one large-scale cyber-attack somewhere, they’re getting from everyone,” he said.
“It limits us to some extent, but the more limiting factor is our risk appetite. We don’t want to go all in on something that we don’t think we fully understand.
“Even if we do think that we understand it now, it might be changing so rapidly that within two weeks, you go on holiday and you comeback and the market is a different place. That’s the name of the game in cyber.
“We’re taking a cautious approach to support our customers with their risks in close conjunction with risk engineering services, or resilience services as we call it now.
“But the reinsurance scarcity of treaties is clearly a limiting factor going forward. But I assume as reinsurers get more comfortable with the risk and understand it better, they will ultimately unlock more capacity for the product.”
