Hans Didring

Nordic insurance is too healthy?! Consumer attracting capital and brokers. Market disparities. Fighting to win brokers hearts. Passing EUR 100m on facilities. But first, an insurance market perspective on the real gold mine of Nordic insurance.

The Nordic incumbents are continuously milking consumers . Combined ratios (C/R) are down to all-time lows, many report figures in the 70%s. Private segment C/R Q1-Q3; If P&C 78%, Gjensidige 70,4% and Tryg 84,2%. Since Private has less volatility ROE is probably over 30%. That is three times better than Nordic banking and European insurance.

The super profit market continue to attract start-up capital . Hedvig, Gofido, Lassie, Insurello and Paydrive have all retrieved more capital during H2 2021. Together more than EUR 60m. Also, several consumer brands consider pivoting into insurance. ICA has been very successful which attracts followers. Protector has seen more requests than ever.

Brokers also move their positions forward on Private . One broker is piloting a consumer offering together with an old mutual insurer. More brokers show interest. That makes it interesting for Protector. An important step in 2021 was to provide capacity for Paydrive starting June and yet another partner in January 2022, soon to be announced 😊

Paydrive uses telematic technology to give consumers a fair price . In cooperation with a cost efficient insurer as Protector they can grow profitably. There are endless opportunities to use the technology for customer service and risk management. Learnings can be applied in all segments.

Protector will continue to look for opportunities and can provide capacity for partners that have a track record of profitable growth. If the value chain is competitive all sorts of products can be considered. There has to be qualitative data . Much as Protector’s strategy for affinity partnerships since more than 10 years.

In Corporate insurance the market is split. Overall profitability is great in the Nordics. All P&C products are very profitable. Premium increases were substantial going into 2021, 5-15% on normal Property. The large insurers have gradually softened their renewals during 2021. The outlook for 2022 is flat. Uncertainty is basically limited to claims inflation .

In this autumn hunt (for new customers) Protector has been very successful on;

- Housing in Denmark and Norway,

- Public sector in Scandinavia and

- Motor in all Nordics.

Public and Bus are two examples of segments where Protector has reached all main targets over time – cost and quality leadership, profitable growth and becoming top 3 . It is exceptionally rewarding to win customers on quality and still being able to provide them with the best price in the market. The risk appetite will be expanded gradually to more segments and complex risks.

The variations in the market are larger than ever. There is limited capacity for severe risks . Incumbents are not spending consumer profits on other segments. They are acting rationally. Coinsurance is being used more than ever before. Many risks seem almost impossible to place, cellular plastic in general, all non-sprinklered properties and large insurance sum accumulations. Large warehouses, school buildings, waste management and wood production is hard to place.

One global insurer puts requirement on their Nordic branch to benchmark all their Property renewals in the reinsurance market. They want to get a market opinion on rates . A Swedish MGA lost their capacity going into 2021. They did not renew customers for several months but managed to find new capacity in spring. A Nordic MGA lost their Property capacity for 2022 but managed to recover it already in December for January 1.

Finland is particular in the Nordics. It is very concentrated, top 4 has larger market share than 90% compared with 80% in Norway and Sweden and only around 60% in Denmark. Finnish incumbents use their market share to limit competition. They do not provide customers or brokers with data. Regulators did legislate against brokers’ interests but do little to make insurers act transparently. Brokers are growing but cannot yet make a big difference in the oligopolist market.

Brokers are all doing well in the Nordics. Going into 2021 many showed some stress as if the market was harder than they expected. This autumn they seem have to put their focus on the toughest risks. When brokers have enough time the hardening market is an opportunity, both to increase fees and to get new customers. Basically all brokers have managed to grow top line and margin during 2021.

Private equity investors, Polaris, KKR, Nordic Capital and Adelis continue to invest and consolidate the Nordic insurance broker market. Howden has grown in Norway by acquiring Aneco. All the global brokers seem to invest in more people . That is great for customers who get strong and independent advice. It is also critical for Protector who is dependent on its only partner to succeed.

Broker satisfactions seem to be good in all markets. Incumbents are good on reactive response . Brokers’ association satisfaction surveys shows that their service is highly appreciated. The professional incumbents have moved more and more to tariffs and processes (from experience Underwriting). Obviously that has been very successful both for profitability and broker satisfaction.

Protector’s fight is to increase broker satisfaction. The target is to be #1 in all markets. It has to be achieved while living our DNA and being the Challenger, ie without losing flexibility or decision-making power. It is not clearly reflected in surveys yet but brokers say that Protector’s broker focus and decentralized decision-making makes a big difference in the market .

The best concrete example is broker facilities that has now passed EUR 100m in the Nordics for Protector. Incumbents are stepping back on facilities in all Nordics. It does not fit their model and need for systematic handling. Protector has won new P&C facilities going into 2022. Continued growth is a big and important opportunity for the future. More resources will be spent on integration with brokers going forward.

Claims handling has been developed in general and Property in particular. The most expensive learning from 10 years is the importance of competence and quality control in claims . In retrospect it is fascinating how it could take me so much time to figure this out. Many people advised me to invest in claims handling and all indicators pointed in that direction.

Otto von Bismarck said that “Only a fool learns from its own mistakes. The wise person learns from others mistakes”. Being a fool, hopefully I have learnt this time. Now investing into Building Project Leaders (BPL). The biggest compliment is that competitors are copying our winning formula . Word is that Trygg-Hansa, Gar-Bo, Folksam and Gjensidige are copying BPL. Protector will continue to develop to provide customers with the best claims handling service.

Recourse control is a critical part of Protector’s value proposition to customers. We always fight for our customer’s right. That means finding out who is responsible for the claim and make sure that party has to take the costs. That is what we call “claims handling the real way”. 2021 is a record year with loads of successful recourses in Motor, Property and Liability.

Protector’s largest ever development project F@ct is coming to an and. Data structure has been improved a lot. The system is connected to external databases to get complete data. Customers and brokers will also have to contribute. The upside is that insurance information will be improved a lot. It will be used to understand individual profitability, manage risks and give each customer the terms and conditions that they deserve. With more information risk appetite will be expanded .

Finally, we have recruited and developed our people and teams in 2021. The turn around in 2019-2020 put a strain on many people and teams. eNPS* went down in all Nordics as a consequence. 2021 was a strong turn-around for results but also employee satisfaction. One learning is to improve support and inclusion for our people in hard times.

In Norway eNPS has improved a lot in 2021. Lars Kristiansen took over as Country Manager on Jan 1. He has a great UW Public background and is a role model for living our values. I am sure that he will build a strong reputation among Norwegian brokers as well. The whole distribution organization will be more visible in the market going forward.

Anders Blom Monberg joined in January as Country Manager in Denmark. He has a solid background from competitors but also from a broker the past years. Anders experience is very good for strengthening relations and achieve more profitable growth with our Danish teams. Also, he has started well and found the balance between challenging and adapting to Protector.

In Sweden Fredrik Landelius has been nr 2 for several years. He stepped up in June and has filled his new position in a very good way. He has spent much more time with brokers – our only friends – and has contributed more to our performance culture development in Sweden. Fredrik's ambition to almost double volume to SEK 3 bln is a very ambitious plan for the future.

Stefan Salonen took over the responsibility as General Agent in Finland in July. He joined in 2015 and has been working in Underwriting since. He is Head of UW since 2019. It was a strength to once again find the right person for the job internally.

I look forward to 2022 and the coming years for many reasons. Henrik has stepped up as CEO. He has put focus and energy behind a vision “One Team”. Brokers and customers will notice that we are better and better in delivering on our promises. Everybody in Protector will act as One Team and support each other to make that happen <3.

*Employee net promotor score is # of “promotors” – “detractors”. There is a scale of 10 on whether the employee would recommend the company as an employer. Promotors are scoring 9-10. Passives scoring 7-8 do not count. Detractors are scoring 1-6.

Hans Didring

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