Digital solutions will help captives take a bigger role in helping organisations navigate an uncertain and evolving risk landscape, according to Andreas Ruof, Head of Value Proposition, Zurich Captives, Zurich Commercial Insurance.

Recent years have seen captives cement and even expand their role as the cornerstone of corporate risk financing strategies. According to Aon’s Global Risk Management Survey, premiums written by captives under its management increased 43% between 2021 and 2023, driven by market conditions and the increasing risk maturity of organisations and risk managers.

Using data and analytics, organisations are better able to understand their exposures and are more comfortable retaining risks. In fact, many are introducing additional risks to the captive, such as property, liability, employee benefits and specialty risks such as cyber (according to Aon, captive cyber premium increased 58% between 2022 and 2023).

Captives are also increasingly helping organisations navigate an uncertain and unpredictable environment, enabling a more comprehensive view of risks and tailored risk management solutions. The recent Commercial Risk Spotlight on Captives Report, developed in cooperation with Zurich Commercial Insurance, highlights the critical role captives can play in mitigating emerging risks, such as the energy transition, climate change and new technology, like artificial intelligence.

Data critical

The fast changing and uncertain risk landscape gives rise to complex considerations and uncertainties for businesses and their boards. Meeting such challenges will increasingly require insights and data to analyse and track risks as close to real time as possible. It is this increasingly holistic approach to managing risk that needs to be considered as part of a captive’s strategy.

While data is now critical to managing risk effectively, the corporate insurance and captive space has lagged when it comes to embracing technology. Many risk managers still rely on spreadsheets for daily activities and interactions with insurers: In FERMA’s 2024 Global Risk Manager Survey, close to 50% respondents say they are reliant on spreadsheets for activities such as Key Risk Indicator (KRI) monitoring, risk quantification, mitigation and reporting, while just 15% say they are using integrated Risk Management Information Systems (RMIS) for these activities.

Responding to customer need

Digitisation is a core part of Zurich’s commercial insurance strategy. The My Zurich portal and Zurich Connector API Solution are two areas where we are helping organisations run more efficient programmes and get more out of their data along the full customer journey.

Marcus Reichel, head of insurance at building materials company Knauf Group, emphasises the importance of working with insurers that provide automated reports on premiums and claims:

“We conduct quarterly reporting with the captive, necessitating premium and claims data on a quarterly basis. This data is essential for creating the profit and loss account in the captive. Insurers that align with our requirements have a better chance of securing our business due to their timely and accurate approach. Proper and timely reporting tools reduce the workload to reconcile numbers by 1-2 days per quarter” he says.

Using an API, Zurich connected to Knauf’s RMIS platform, giving its insurance team access to up-to-date information on all its policies across more than 90 countries. “The next step would be to on-board more insurance partners to such a system so risk reports, value collection and premium allocation can be calculated, viewed and analysed across all lines of business,” Reichel says.

Insurance certificates on-demand

Another area where Zurich is responding to the needs of customers is by providing real-time access to issue certificates of insurance. Required as proof of cover by suppliers and business partners, certificates are often time-critical, last-minute and take a long time to obtain, explains Sharon Blattmann, Delivery Lead for Market Facing Digitalisation at Zurich Commercial Insurance.

“We have developed a self-service solution where customers can log into the portal, request a certificate, and receive it within seconds instead of days. My Zurich now allows customers to issue multiple e-certificates in just minutes. Whilst this may sound like a simple solution, the time it saves and value it provides to customers should not be underestimated,” she says.

The ability to generate insurance certificates digitally is appreciated by insurance buyers, according to Reichel. “If we can produce these through a self-service certificate capability within seconds, through an agreed framework with the insurer, and keep the certificates in an online library, that is very useful, especially if this could be rolled out and accepted globally, ” he says.

Valuations is another area where technology can improve the working lives of risk managers. The manual process of collecting property and asset valuations in multiple spreadsheets still widely used is a highly inefficient use of risk managers’ time. However, Zurich has recently launched a functionality that automates this process, using technology to create a single up-to-date source of values that can be viewed across the customer group and shared directly with insurers. At Knauf, “we have the internal process already lined up within our RMIS environment, but the exchange with many insurers is not yet possible”

Going even further

Inquiries from customers seeking to adopt a digital approach are increasing, and these conversations are becoming more sophisticated regarding achievable outcomes. Knauf, for example, has put considerable thought and effort into digitising its claims handling and management data.

“We need more insurers capable of keeping pace with us or, better yet, insurers who can drive digital interaction with customers in all applicable areas. Ultimately, this saves costs for both sides,” says Markus Hassold, Head of Claims at Knauf Group in Germany.

However, it is essential to understand the customer needs before developing new products or processes, explains Jonathan Newbery, Global Head of Broker & Customer Proposition, International Programmes, Zurich Commercial Insurance. “The commercial insurance industry as a whole has historically been slow to adopt any kind of technology or digitisation of its processes. However, over the past five years, I have observed a significant positive shift,” he says.

Captive innovation

Implementing a captive digital strategy will take an investment in time and resource, but the results are of great value. Risk managers want to spend less time administering insurance and captive programmes and focus more on understanding their organisations’ risks in more depth and designing risk financing strategies. Digital connectivity and access to high-quality risk data enable captives to deliver such strategies, build risk resilience and captive profitability.  

Zurich’s mission is to help customers operate more efficiently, delivering the digital tools and solutions risk managers need to drive innovation and get the best out of their captives.