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      In 2024, the industrial insurance market continues to be a challenging environment. After years of falling premiums in many lines of business, there have been significant changes since around 2020: Capacities have been limited, while premiums - particularly in critical areas such as D&O and property insurance - have risen.

      Companies are faced with the challenge of providing adequate cover in an increasingly complex risk landscape. Particularly in property insurance and cyber risks, the supply situation for larger organisations remains tense.

      Added to this are geopolitical uncertainties and the increasing demands of a globalised economy, which are forcing German companies to continually adapt their insurance strategies.

      Well-coordinated, efficient processes required

      Despite the strains on the market, positive developments are also recognisable. Reinsurers and insurance companies have been able to benefit from premium increases and portfolio reorganisations in recent years and new providers are entering the market. This has already led to a slight easing in some areas after the years of the "hard market", particularly for less complex risks and risks with claims.

      Overall, the industrial insurance market remains dynamic and requires companies to have well-organised, efficient processes in order to be able to react appropriately to future developments. For many corporates, however, this also means working with trustworthy external insurance experts to an appropriate extent.

      In the current market environment, the complexity of risks, for example in the area of cyber, and regulatory requirements are increasing. This increases the demands on the insurance management of nationally and internationally operating companies.
      Frank Pallentien

      Frank Pallentien

      Manager and expert in industrial insurance

      KPMG AG Wirtschaftsprüfungsgesellschaft

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      Challenges facing the insurance industry

      Insurability

      Whether due to a major loss or limited capacity on the market - the limits of insurability are becoming apparent time and again. We know from our project experience: The right target operating model, the right deductibles (forms and amounts) and clear positioning and communication with insurers are decisive success factors. If the market is tough for you, we will help you to find and implement an appropriate form of risk-bearing.

      Broker

      For many corporates, trusting cooperation with a professional broker is a key success factor in their insurance business. In addition to many operational tasks, good brokers also contribute benchmark knowledge and stand in the corner of the corporate. Are you not sure whether you are being professionally looked after by your broker? Then we will be happy to help you answer this question. From simply analysing the collaboration, if necessary, to tendering the broker relationship and onboarding a new broker.

      Outsourcing

      If insurance does not play a major economic role in a company overall, it is often seen as a necessary evil. Insurance management then often has to be taken over by employees who originally have other tasks and manage insurance "on the side". However, the reliable management of insurance is challenging and requires specialised knowledge to be carried out appropriately. In such situations, it may be better from a make-or-buy perspective to outsource the specialised parts of insurance management to an independent third party. Especially when it comes to monitoring and commenting on the work of a good broker.

      Target operating model

      The optimal structure of insurance management for your own company depends on numerous factors. Not just the big questions of whether you need an insurance captive, an in-house broker or an in-house claims department for large deductibles in special types of liability, etc. Major advantages can often already be realised in operational processes.   Would you like to review the organisation of your insurance division? We would be happy to work out the strategic options for a modern target operating model for you.

      Lack of transparency in the Group

      Lack of transparency in insurance management can have many causes - internationality, regional interests, acquisitions, strong organic growth and more. Nevertheless, transparency is important. For example, for Group-wide Risk management. But cost efficiency (internally and in terms of insurance premiums) is also generally higher if the most important contracts are purchased centrally - for example in property and liability. Would you like more transparency in insurance management? We talk to your insurance managers and work out the desired transparency - from the GAP analysis to the development of an international insurance monitoring system.

      Internal audit

      Insurance areas are also audited by the internal audit department. In our experience, a useful scope is often the control system in the area, but also the completeness and appropriateness of the cover. We recommend the involvement of external experts when conducting internal audits in insurance areas, as it is often difficult to adequately assess the content of matters without the relevant specialised knowledge.

      Reduce costs

      Transferring risk is good - but it also comes at a price. Are the costs and benefits of insurance not in the right proportion for you? Then we can help you to optimise your costs for insurable risks. Based on benchmark knowledge and our objective view, we help you to identify and utilise specific potential for improvement. For example, we analyse covers, streamline and professionalise processes and analyse the costs of your most important insurance covers using actuarial methods.

      Integration/harmonisation of subgroups/acquisitions

      A company or entire subgroups need to be integrated. But how should insurable risks and the insurance sector be organised? In the new target picture, all parts of the group must be able to rely on risk and insurance management. We would be happy to discuss with you the options for implementing harmonisation and integration in a suitable manner. Whether during due diligence or after the purchase agreement has been concluded.

      Captive

      Do you work in an international group and spend significantly more than 10 million euros a year on insurance and deductibles for insurable risks? Then the topic of insurance captives could be of interest to you in special constellations. In this situation, we recommend starting with a simple top-down analysis by an independent third party expert. In the next step, the claims side of your largest insurance lines should be analysed actuarially and only then should other topics such as country, legal structure, regulation, responsibilities within the group, etc. be examined in detail. After all, having an insurance captive also means that a large part of the volatility of the insurance business remains within the Group.

      KPMG solution approaches in corporate insurance

      We have a dedicated team specialising in solving these challenges for our clients. Our team includes industrial insurance experts with various relevant professional backgrounds: Former underwriters, industrial insurance brokers, actuaries, regulatory and tax experts, lawyers, corporate finance experts to set up insurance captives and many more.

      With this team, we have developed solutions that can be applied to many practical challenges in corporate insurance (excerpt):

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      • Brief analysis of insurances

        To efficiently record the status quo and identify any potential for improvement

      • Coverage analysis

        An in-depth analysis that draws up statements on the suitability of the insurance cover in relation to the existing risk

      • Valuation of offers and retentions using actuarial methods

        This is where our detailed and objective total cost of risk (TCoR) analysis comes into play

      • TOM insurance management

        Our recommendations for your operating model are based on the individual needs of your company

      • IVPs and national characteristics

        We help you find the right approach for international insurance programmes (IVP) and identify regulatory and legal stumbling blocks

      • Foundation of in-house broker

        It can pay off in the insurance market to employ your own staff. We support you with our experience in evaluation and implementation

      • Renewal Support

        With our many years of experience, we can provide you with independent support during negotiations and evaluate options

      • Broker tenders

        We help you find the right partner for your ongoing insurance needs

      • Outsourcing of insurance management

        When "buy" makes more sense than "make"

      Your contact

      Frank Schönfelder
      Frank Schönfelder

      Director, Financial Service Insurance

      KPMG AG Wirtschaftsprüfungsgesellschaft