What’s keeping risk managers up at night?

In a softening commercial market, underwriters are looking to offer capacity to clients with a low risk of claims exposure. In this environment, a broker’s value is derived from differentiating their clients’ risks from others, says the head of Marsh Canada.

Data-driven analytics is a critical way to do this, Sarah Robson, president and CEO of Marsh Canada, tells Canadian Underwriter. She spoke to CU about a wide range of topics in advance of the RIMS Canada Conference to be held in Calgary from Sept. 14-17.

Brokers should not be relying on static, historical data, she says. Analytical models and data must be current, dynamic, specific, and sophisticated.

“When you think about sort of traditional analytics, they have relied on historical data, generic benchmarks, and that’s really just insufficient in today’s environment for an organization to be able to build effective resilience,” Robson says. “[Resilience] directly ties into how [clients] treat risk and their risk tolerance, and how they want to transfer risk as well.

“The focus on data-driven analytics and being really bespoke…[is] not [based on] generic data. It’s very specific to the perils of a particular industry…

“The opportunity for a risk manager to [use risk management tools offered by the broker] to evaluate their risk and seeing how it’s changing, and therefore have the confidence to make risk tolerance decisions, and use those insights to drive their decision-making, is a game changer for companies…”

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For example, when talking to clients about potential tariff impacts, brokers at Marsh employ sophisticated risk modelling to show clients their supply chain risks.

“We have an AI-driven tool, called Sentrisk, that effectively uses AI supply chain details, and overlays geospatial technology on top of that, to look into multiple layers of a supply chain of a client’s company in order to [see] where those [supply chain] weaknesses are — a dependence on single suppliers, for example.

“And we took that tool, within the current [economic] environment, and we created a tariff simulator that effectively allows a company to evaluate and analyze — and ultimately put a number on — where those vulnerabilities are from a trade perspective, and what those tariffs are going to do to their overall costs.”

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In addition to trade issues, NatCats continue to be a source of concern for commercial clients, Robson says.

The Jasper wildfire last year revealed a number of commercial policyholders were underinsured, insurance executives noted in a panel discussion at the Insurance Brokers Association of BC in June.

Brokers responding to CU coverage have commented on social media that business interruption coverage in commercial policies aren’t accounting for the extended amount of time it takes to rebuild communities in the wake of wildfires. And the economic fallout of NatCat losses are weighing heavily on the minds of clients in the wake of a catastrophe, Robson says.

“What those [Cat] events are really highlighting is the disparity between economic loss and insured loss,” Robson says. “So that protection gap is continuing to widen.

“I think it really highlights, particularly in Canada, a need for government and industry, the insurance industry in particular, to be more innovative in building community resilience for those weather loss events.”

Commercial clients are increasingly concerned about NatCats, she says. And “it’s not just the obvious economic impact, the direct property damage and business interruption, but it’s also the longer-term effects on the communities and the ecosystem as well…

“They are looking for us to be involved in helping them. What help can we provide to help them build resilience, in order to be able to manage those perils through risk mitigation and preparedness?”

David Gambrill

David has twice served as Canadian Underwriter’s senior editor, both from 2005 to 2012, and again from 2017 to the present.