JLT Risk Solutions is leveraging its Northern European expertise, and indeed the wider JLT Group’s experience to meet ever-expanding and diversifying demands
Writer: Matthew Staff
Project Manager: Stuart Parker
Falling under the umbrella of one of the world’s largest insurance brokers, JLT Risk Solutions - as a strand of JLT Northern Europe - continues to serve as a regional and global pioneer across areas of credit and political risk management.
The aforementioned parent organisation, JLT Group PLC is one of the most renowned names across the world of finance with more than 10,600 employees situated across as many as 135 countries; and for Northern Europe, the journey began in earnest in Sweden in 1997.
JLT Risk Solutions AB Partner, Magnus Lindgren introduces: “Our core areas of insurance intermediation are in crime & liability risks, credit & political risks, property & business interruption, construction, and life science. In addition we specialise in affinity, with specific focus on insurance for banks and other financial institutions as well as insurance relating to mergers and acquisitions.”
With a core client base comprising businesses with specific insurance needs in conjunction with complex risk profiles, the need for a reliable, experienced and established solutions provider is paramount, and it is resultantly the Company’s believe that risk mitigation should be provided by market-leading specialists such as JLT.
“This prerequisite is facilitated by the fact that we only operate in areas where we are or can become market leaders,” Lindgren adds. “This is most certainly true within the field of credit, political and security risk where we have some of the most experienced people in the region at staff and board level. JLT in Stockholm was the original pioneer with regards to the first facultative collaborations between the private credit insurance market and the Export Credit Agencies (ECAs) around the world.
“Our long experience in the field has rendered us the title Group Centre of Excellence for this practice, which continues to be a very active area almost two decades later.”
Recognised as leaders across success parameters including sector knowledge, cost-effectiveness, policy advice, business understanding and customer service, JLT Risk Solutions in Northern Europe continues to achieve excellence; striving from a unique platform of being able to offer the most comprehensive surety and bond solutions in the market.
“When placing credit & political risk, we have access to more than 70 insurers globally, benefitting especially from our London team being one of the largest Lloyd’s brokers in the field and our strong Asian team accessing local markets for a very dynamic region,” Lindgren affirms.
Over the years, JLT has put a lot of emphasis on solving traditional issues that numerous clients face in the credit insurance domain. Meeting banks on common ground and providing products that are useful from banks’ perspectives was a key starting point for this; while on the export side, the Company has enabled a smoother and faster process to obtain cover for important and exposed contracts.
Quote speeds are of course facilitated by JLT’s global presence and it’s ‘seen it all’ experience base, while the business’s role as a practice leader for the public sector is another differentiator driven by its unrivalled workforce and subsequently flexible, global outlook.
“Political risk is high in many areas around the world, and the uncertain economic climate results in increasing credit risks,” Lindgren offers one particular trend that JLT’s flexibility is countering at present. “This in turn, has resulted in more and more exporters re-evaluating their credit policies and the way they view their exposure. As a direct consequence, the financing banks are also looking with increased interest into the private market for credit and political risk insurance as an alternative to the ECAs.
“Whole turnover credit insurance, where exporters insure all of their exports, has never really picked up in the Nordic region and particularly not in Sweden. Instead we see a large pick up in the interest for the more tailor-made single risk credit insurance, where the exporter selects the projects and contracts to insure on a case-by-case basis.”
For the Nordic region specifically, the increased demand for faster service and enhanced innovation is combining with two additional trends which continue to elevate credit insurance’s importance for banks.
Lindgren continues: “Basel, CRR and other regulatory issues limiting the risk the banks can keep on their own balance sheet and increasing the capital allocation costs, have brought credit insurance to the attention of the large Nordic banks. Hence, all the large Nordic banks are discussing how and when to use credit insurance for supporting capacity, concentration and capital allocation issues.
“Further, the extremely competitive global environment makes credit terms and financing crucial commercial tools when competing for international contracts. This often stretches beyond what the ECAs can and are allowed to support, and turns the focus of exporters and banks to what private insurers can offer. The Nordic banks are increasing their use of the private insurers in order not to lose these export contracts to continental or UK-based international banks who are more acquainted with the private market.”
Ultimately, both exporters and banks have become surprised at the speed of the private market and the competitive conditions on offer.
Additionally, with more and more industrial services being performed on-site or outsourced overseas, credit protection once again takes on a new dynamic more in-line with the private market; namely epitomising the overriding role that globalisation is playing in the financial sector.
And, as Lindgren emphasises, there isn’t a better, more representative, global credit and political risk entity than Lloyd’s.
“Consequently this is where we eventually place most of the policies,” he explains. “However, for Asian risk there is a strong local market emerging which is an excellent complement for business terminating in that region. Further, the continental European Swiss, German and French insurers are also becoming increasingly active and form a viable complement to Lloyd’s.
“The local insurers in each country usually focus on larger insurance programmes for short trade credits, but it is our impression that their mandate to do longer credit risks and look at single situations is increasing.”
However, when addressing bonds and surety, the situation switches, and sees local providers taking a proactive role in offering alternative bank guarantees.
Again though, JLT remains flexible enough - despite its size - to serve clients in an entrepreneurial and bespoke way no matter what the demand is; an ability that derives from its primary role as a specialty broker. As such, JLT will look to continue capitalising on Nordic banks’ more expansive usage of credit & political risk cover, meeting demands from small, medium and large banks and exporters alike in order to lead the direction of the industry in Northern Europe in the future.
“We only focus on areas where we think we can perform world-class services, courtesy of our highly skilled and experienced specialists; rather than generalists,” Lindgren concludes. “In credit & political risk, there simply are no bread and butter cases. Every contract is unique to its content, geography, size and tenor and needs to be treated as the unique transaction it represents. Our brokers need to understand and manage the implications of the export, credit risk, the financing and the commercial terms, regardless of industry and geography.
“When dealing with the heart of your business, namely your customer contracts, you do not want a generalist but a specialist!”