LSM's mission in Europe: helping companies to be future proof

Geopolitical conflicts, climate change, artificial intelligence... It is no exaggeration to say that the future is fraught with risks for businesses. 

To overcome the challenges they will face in the coming years, organisations will need partners to support them in a constantly changing business environment. 

Liberty Specialty Markets' (LSM) proposition is to be that trusted partner of European companies. With a team of high-quality specialists, strong financial strength and an international presence, LSM offers solutions for a challenging market through sound risk management and access to a wide range of insurance coverages.

In other words, its mission is to help build "future-proof" companies in the European market.

But not proof from everything the future holds. The future brings risks, but also prospects for business growth. The most important thing is to know how to open your arms to opportunities without falling into the traps that are sometimes hidden behind them.

How do you do that? LSM is clear: the first and perhaps most important step is to listen to clients. 

"Our philosophy is to talk to our clients to understand their needs and develop new products or ways of accessing the market," says Alfonso Garcia Larriu, LSM's managing director in Spain. "As a specialty insurer, we want to present solutions based on dialogue with companies and the input of our team of specialists.”

This is not about reinventing the wheel, but about adapting to the needs of European businesses. If 30 years ago organisations wanted to be as reliable as a German car, today they need to be as agile as a Formula 1 car and as resilient as an aircraft carrier. But only time will tell what they will need to be like 30 months from now with all the changes coming from, for example, artificial intelligence and new technologies. 

Claims management

The reality is that change is constant and endless. LSM is aware that, as the business environment evolves, so do the expectations of risk managers and policyholders. Take claims management as an example. 

In May, LSM teamed up with AIRMIC, the UK's Association of Insurance and Risk Managers in Industry and Commerce, to develop a survey of companies' real expectations of claims management. The findings were very revealing, not least because one of them was that cost is not the most important issue for clients.

What risk managers want is for claims teams to be more actively involved in the entire life cycle of an insurance policy, from underwriting to renewal. They are interested in high quality services and good communication with claims teams, as data on losses incurred by the company can help refine coverages and strengthen risk prevention.

What's more, while risk managers may welcome the use of artificial intelligence in claims management, they are not yet in a position to reject a decision made with the technology, which makes them insecure. They will need to work with their partners in the insurance market to help them in the task of enhancing claims management with the use of artificial intelligence.

"Claims management will play an increasingly important role in the risk underwriting process and the bar will be set higher and higher," says Liberty International Insurance Europe president Kadidja Sinz. "The survey shows that risk managers are placing increasing importance on claims management services, other value-added services and underwriter relations." 

Energy transition and other challenges

What is true for claims management is also true for the major challenges facing businesses in today's world. 

A case in point is the energy transition and climate change. Businesses know that the shift to a more sustainable economy is a journey of no return. This is especially true in Europe, where major regulatory changes are being implemented to accelerate the business transformation process.

But do your partners in the insurance market also know this? Many risk managers say no. They often complain that insurers often pay lip service to ESG in their annual reports, investment policies and at conferences. However, they do not seem very willing to reward their clients' sustainability efforts when underwriting their insurance policies.

LSM is working hard to place sustainability as a priority in the underwriting process. To this end, among other actions, LSM is developing new services such as a forecasting tool, together with Previsico, which helps companies to predict and mitigate flood risks in their facilities, thus increasing their resilience to natural catastrophes. 

The company is also a world leader in surety bonds, which can often be a prerequisite for a renewable energy project to go ahead in European markets.

"We are already supporting companies in their transition process. For example, when they invest in renewable energy technologies or in new energy sources that are often not 100 percent developed," says Sinz. "In addition, we maintain a sustainability dialogue with our clients. We have to anticipate the risks of the future so that we can accompany them towards a more sustainable business model."

Sinz notes that it does not make sense to broadly define which industries cannot take out insurance because they pollute the environment. After all, many of these companies are making great efforts to transform their businesses to more environmentally friendly models.

For LSM, supporting companies that are making a real effort towards sustainability is part of its mission to help create a more resilient economy in Europe. That mission is fulfilled through a holistic view of the risks inherent in the energy transition, a view that is born out of constant dialogue and knowledge sharing between all parties involved, says Sinz.

For life

The idea of following companies on their journey extends to the very lifecycle of an organisation. LSM is committed to meeting the needs not only of large corporations, but also of the small and medium-sized enterprises that make up a large part of the European economy.

"Small business managers also need to sleep at night ", Sinz observes.

The insurance market has a role to play in many of the major transformations that mark the life of a company. If a family group decides to make a public offering of shares, it will need coverage to mitigate the risks of the process. When a company is looking to grow outside its home market, credit or political risk insurance will give it the peace of mind it needs to make investments. If you plan to acquire or merge with a rival, warranties & indemnities cover can ensure the success of the deal.

Sinz says that a company can be sure that LSM will be by its side in these and other situations they will encounter along the way. LSM has already given ample proof that it will always be there for its clients.

LSM is part of the Liberty Mutual group, founded in 1912 in Boston, which today operates in 29 countries. It is the eighth largest P&C insurer in the world, employing more than 45,000 people and with more than $162 billion in assets at the end of 2023.

"We have been in market for more than 100 years, and we will continue to be with our clients for as long as they want to be with us ", says Sinz. says Sinz. "What we value most are long-term relationships. There are companies in the United States that have been working with our group for more than 50 years."

Liberty Mutual follows the mutual insurance model which, in García Larriu's view, offers significant advantages to its customers. Without the need to react immediately to the mood of the financial markets or shareholders, a mutual can make long-term commitments that go beyond market cycles.

"When the market became tough a few years ago, many insurers withdrew capacity from the European market," says García Larriu. "That's not what we do. It doesn't matter if the market is hard or soft, LSM is always there with capability and risk appetite."

Cyber and other risks

The same applies for segments such as cyber risks. Today there is a large capacity in the market for cyber insurance, but underwriting is still very restricted and new risks are always emerging, which makes insurers reluctant to work with certain clients. García Larriu says that, once again, what is needed here is to talk to companies interested in protecting themselves against the threats they may encounter in the digital economy.

"You have to learn what each client's risk consists of, and this is another issue we are addressing with companies and brokers to meet needs that go beyond traditional cyber policies," he says.

In this and other risks, García Larriu says that one of the company's big bets in Europe is to develop its operation in the so-called portfolio solutions, through which LSM offers insurance capacity to third parties such as agencies (MGAs) and brokers, allowing more clients to access our specialty offering. In this way, the company has access to a wider audience and can work with different markets on the continent.

Another priority is the introduction of artificial intelligence technologies with the aim of further increasing the efficiency of internal and external processes. On behalf of customers, LSM also wants to be more involved in the global business of European companies.

"We want to provide increasingly comprehensive services for international programmes, wherever our clients choose to invest in the world," adds García Larriu.

Commitment to Europe

LSM has more than 50 offices around the world, with a presence in key markets such as the United States, the Middle East, Asia-Pacific and Latin America. The company closed 2023 with €4.9 billion in insurance premiums in segments ranging from financial lines, energy and construction and marine insurance, to professional liability, war and terrorism and environmental liability.

The company is very focused on further growth in the European market. Headquartered in Luxembourg, LSM Europe has teams in Germany, Italy, the Netherlands, Switzerland, Ireland, France and Spain, as well as a strong presence in the London market. It is currently opening offices in Belgium and Norway as part of an ambitious investment plan through to 2030 on the continent.

The European momentum aims to continue to accompany companies for many decades to come and wherever they operate in the world.