December 16, 2014 by Ronan O'Beirne and Jeff Pearce
A moment of brief sorrow now, please, for the legions of accountants who let one of the best and the brightest slip away.
There was a time, years ago, when a part-time staffer from New Jersey had to decide her future. There she was, about to finish up her internship at Chubb, and she must have distinguished herself because her boss, who knew that she hoped to be an accountant, decided to influence her future. “I think it might have been the first time he had actually talked to me,” recalls Ellen Moore, “and he said, ‘That’s crazy— you don’t want to be a public accountant.
They wear visors and carry pocket protectors, and you have to use a no. 2 pencil.’ He said, ‘Come into insurance underwriting,’ and he gave me an opportunity to interview with a bunch of his peers. You know, at that young age, I’m not sure I was fully appreciating what sort of a lift I was getting in my career trajectory.”
She must appreciate it now. As president and CEO, Moore steers Chubb Canada from the 25th floor of a building in Toronto’s downtown Commerce Court, where her corner office offers a spectacular view of the gleaming harbour, the CN Tower just poking its head out impressively close behind a nondescript, neighboring office block. Throw her a curve ball and ask her if we’re stodgy up here when it comes to insurance, and it’s clear that she’s long mastered our famous sense of mild manners and tact (Moore became a Canadian citizen in 2013).
“No, no,” she insists. “Is Canada a stodgy insurance market? I mean it’s the insurance business, it’s not particularly, you know, the entertainment business… I would say that we might be a little more formal… We’re polite, we’re Canadian polite. We’re not stodgy.”
It’s been ten years since she took over the top spot, and today, she’s just one of an impressive corps of accomplished female leaders in the industry: Silvy Wright at Northbridge, Brigid Murphy of Travelers, Sharon Ludlow at Aviva, Economical’s Karen Gavin and Heidi Sevcik at Gore.
She admits that “a lot has changed in the industry. I think, first of which, there is a substantial amount of excess capital that’s emerged over the last ten years. We see it particularly in—well, we see it across all product lines… in some of our executive liability spaces where, when I first came to Canada, we probably would count maybe six or seven competitors in the market.” Moore says if you asked Chubb underwriters today to do a head count, there would be more than 50 vying for business.
What’s impressing brokers lately about Chubb is how it has led the way in cyber and directors & officers insurance. Headline-grabbing cyber breaches are easy to count—what’s not so easy is assessing whether clients are learning the lesson that they need substantial coverage.
As Moore points out, the price tag goes up on the commercial insurance expense, and then treasurers and CFOs will “bring the CIO in who says, ‘Don’t worry, we’ve got everything under control. We buy all of this protection, we build the system in a way that it can’t be hacked.’ And that is often, unfortunately, where the discussion stops. And so, it’s a relatively new coverage in the market, and it’s been around certainly for four or five years, and I do think that you’ll see a few more of these incidents… that are going to let the buying public appreciate what’s being covered. You know, what’s the real tangible benefit that they’re buying coverage for.”
If funds were unlimited, she argues, boards of directors would want cyber insurance to be purchased. But the tap can’t flow forever, so brokers and their client have to weigh their options. “And I think at this point, the CIO there is saying, ‘We’ve got this covered.’ Which is clearly not necessarily the case.”
Moore remembers, for example, decades ago when people didn’t believe it was necessary to buy D&O coverage, “because they had the best directors, and there was not a level of liability that the company was exposed to. And that took some time to develop as well.”
Moore says Chubb remains a leader in D&O because it was one of the first to market with a product that takes a long time to prove its worth. “And it’s a line of business that is substantially long-tail in claims, and you as a client, really, when you’re buying this coverage, want to be able to know that there is the financial wherewithal 10, and as many as 20, years later to be able to pay these claims… One of the things that’s interesting in the buying decision and the broker recommendation over this purchase for D&O is new entrants, and the fact that they don’t have that claims reputation. Chubb has that claims reputation, and I think that that clearly hasn’t changed.”
She believes the company has done an even better job in the last few years in diversifying away from D&O for large, publicly traded companies and focusing on organic growth in placements for private companies.
In at least one case, Moore can directly chart the progress of a key Chubb product, the Masterpiece line. When her colleague persuaded her to get into underwriting, she went into management training in personal lines—just as Chubb was rolling out Masterpiece. The product name might be over the top, but she says it reflects what it does. “We went out to our brokerage community in the U.S. and in Canada, and we said we wouldn’t call it a masterpiece if we didn’t think it would perform like one.”
As Moore puts it, the company has a long track record of providing coverage to clients of high net worth—and high society. “And so it was truly expected to almost be a concierge approach, if you will, for people who had some fancy toys that they wanted to insure.” What kind of fancy toys? Because we’re talking about the More Money Than God Club. “Well, you know, everything from amazingly large yachts, where the hull values of the boats are in the multiples of millions, to very unique collections of jewelry, where jewelry items can be of substantial sizes [and] again, multiples of millions in any single item. Certainly wine collections are not unusual.” We’re not talking the average Beaujolais—for blanket coverage, you’re insured up to $5000 a bottle. We’re talking art collections that are more Picasso, one imagines, than that Jack Vettriano print of folks dancing in the rain under a butler’s umbrella.
Moore says Masterpiece “anticipated very broad limits… coverage that was probably unique to this particular market, and it was very much built around having a different perspective by the client that insurance, too, could give you a customer experience that you would value.” But she points out that “we also insure a lot of people who value that customer experience and may not have quite that amount of wealth, but clearly believe that the right coverage for their valuable possessions is very important. I think people underestimate that the things they own in houses and valuable are probably a significant part of their overall net worth.”
One of the reasons, Moore says, that Chubb is committed to the independent brokerage network is because there’s a level of expertise and consultation that’s needed when dealing with a high net worth individual, or even with a commercial client that’s a little bit beyond mainstream, such as manufacturing. “So I think that is the job of sort of the trusted advisor in your insurance broker, to make sure you’re understanding the needs of clients.”
It seems that, almost every month, there’s a conference in which insurers try to reassure the brokers that they’ll keep their link in the food chain. It was a song sung during the NICC conference in September, and another chorus was sung for the IBAO in Ottawa in October. As we noted in last month’s issue, PwC’s Broking 2020 urged brokers to play more of a collaborative advisor role.
“I think that’s always been their role,” says Moore. “You know, their role is to be the trusted advisor and consultant, to anticipate where your risks are going to be and where they currently are… and consequently find the right market that’s going to provide that right product.
“So, you might be more directing the comment toward the personal insurance buyer, which… in my time in Canada, we have seen a fairly significant shift from independent brokerage placements with insurers like Chubb to some of the direct writing companies. So I think there clearly has been that shift, and I think that the brokers have realized that that’s an opportunity for them to sort of regroup and get at that consultative approach that’s needed.”
The Internet seems to be the hungry beast that never gets full, consuming newspapers, music and now gnawing away at insurance markets. Moore naturally recognizes brokers’ concern. “I think what the brokers need to embrace is the fact that there needs to be added efficiency gains across the enterprise or across the transaction. And where companies are introducing technology platforms, broker portals—all of that is something that the broker needs to embrace.”
Chubb has had a personal broker insurance portal on the landscape for some time and, early next year, it plans to introduce “Chubb Folio” for personal insurance clients, “where they’ll be able to log in and actually look at their coverages at their leisure. And then work with their brokers to be able to get product recommendations.”
The company has the advantage, of course, of its global footprint and being one of the few firms that sell across the product spectrum. “So you can provide the package policy on the commercial side, round out the commercial exposures with whatever level of executive liability is needed. We’ve seen a lot of uptick in our ability to help brokers round out the business in that way. And then, if you want to be really progressive as a broker, you can take a look at the executive management and even the board of those companies, and offer everything from outside director liability coverage to group personal accident coverage to group excess coverages.”
Chubb’s also rewriting its wording for E&O for both technology and life science customers and has made “a big push” in green energy, like solar and wind projects. “We are, at our core, a marine underwriter,” says Moore. “That was what Chubb started as in 1882, way back when. And so we’re going to re-emphasize, especially in the energy space, some of the products that are in the marine area. We’ve again added some focus there with staffing and product design.”
Talking about Chubb’s future prompted the conversation to circle back to considering what’s changed, and Moore remarks that “our regulatory environment has certainly become pretty amazing. The regulation of the insurance business in Canada has certainly increased a lot in my time here, and is fairly significant… It truly impacts the cost of doing business. And that may be not as transparent, if you will, to our clients and to our brokers. And it’s very important for insurers to have adequate capital management. And the regulators clearly look at that, and they have oversight for other regulation, and I think there’s a level of guidance on rate and form.”
She believes most insurers would agree “the emphasis might be a bit disproportionate to the property and casualty business. We fall under the Banking Act, and I think that’s due to the fact that we are very conservative as an industry in how our capital is invested.”
But is it too much then? Moore makes her answer a “plain no.” Canada enjoys a very stable economy, she says, and appropriate regulation certainly has been helpful. It’s a polite, measured—signature Canadian—response.
Copyright 2014 Rogers Publishing Ltd. This article first appeared in the November 2014 edition of Canadian Insurance Top Broker magazine
This story was originally published by Canadian Insurance Top Broker.