Howden: Risk transfer chain alignment critical to “joined-up” value proposition

Broker Howden has called on the industry to deliver a “joined up” risk transfer chain to better service the growing needs of clients, and to be be braver when addressing the unknown.

In an interview with The Insurer TV at the Federation of European Risk Management Associations’ (Ferma) Forum 2024 in Madrid, CEO David Howden and CEO for Europe Luigi Sturani discussed the efficiencies of the risk transfer function and how risk officers are being served.

“It’s really important to be joined up,” Howden said.

“Ultimately, our clients are people we need to serve, but along that chain, there's everything. There's the capital [that] will need some return; how that capital flows into the market; how that reinsurance capital is there; how that direct capital is there.

“For me, it's about actually aligning that whole chain.”

Howden warned during The Insurer’s Pre-Monte Carlo Forum last month that the dramatic shift in cat loss burden away from global reinsurers to its clients may result in the sector losing its relevance.

He told The Insurer TV the insurance market is “relatively efficient” but sometimes “can be a bit spiky”.

“Sometimes our cycles go up and down but ultimately, it's about really working out: What do we need to service our clients?” Howden explained.

“Can we find the capital for that? Can we take risk off their balance sheets and manage those risks? Clients will end up keeping some risks on their balance sheet, some risks that won't transfer, and that's our job as brokers, to help them manage that relationship.”

Sturani noted he was satisfied by how the sector provides solutions for traditional risks, but said it should look to focus on addressing unknowns.

“Where probably we are lacking is having a bit more courage, being brave in trying to cover the unknown or what really is not supported from our historical data,” he said.

However, he warned that the “theory is very simple – the reality is much more difficult”.

“With David, we keep having discussions about who must be, really, the ultimate risk-taker, when you go into the unknown areas of risk,” Sturani said.

According to the global risk managers survey 2024, published by Ferma yesterday, concerns are rising among risk managers that key exposures may become uninsurable in the future.

The survey, which polled over 1,000 practitioners in 77 countries, revealed 53 percent of respondents believe key business activities and locations will become uninsurable, up from 41 percent in 2022.

European growth

Howden has significantly grown its business in Europe in recent years with acquisitions in the Netherlands, Denmark, Luxembourg and Belgium.

The firm’s founder Howden said the expansion strategy in Europe is driven by the need to provide choice, particularly for talent.

On talent, he noted staff at larger corporations had previously faced a lack of choice around “where they might go on” to.

Howden explained the group “grew 25 percent in totality” last year with a large proportion of the growth stemming from Europe.

“We've been investing in the Middle East; we're investing in Asia. We just bought Contacto in Peru as well, so we are looking to expand globally. We now operate with 19,000 people in 55 countries.”

Watch the full interview to hear more about: