Joerissen: Here I need to briefly explain the AGCS business model. AGCS, which has been in existence for almost two years now, combines optimal risk capital and portfolio management with local expertise to offer solutions for complex industrial and special risks, particularly for internationally operating companies. In the center of this model stands the customer. This customer focus, therefore, requires a structured interplay of Underwriting, Claims, Risk Consulting and Market Management across local entities.
The bread and butter business of Allianz Risk Consultants is the carrying out of risk analyses, including loss control programs, to be able to effectively assess, evaluate and contain risks, and to prevent losses from occuring in the first place. It optimally supplements the AZT R&T's claims experience, that is to say, the inspection of losses when they occur.
AGCS + AZT = Optimized Risk Management
Why does the Allianz Center of Technology Risk & Technology area (AZT R&T) fit the AGCS model?
What other tasks will AZT R&T have apart from the grass roots business of claims experience?
What other tasks will AZT R&T have apart from the grass roots business of claims experience? Joerissen: On a second level, a worldwide network of experts will analyze causes of loss – both with regard to the possibilities of restricting their scope and duration and also in terms of their comparability to similar type of risks. Moreover, the new unit will examine mega trends and long-term developments of risks in industrial insurance to be able to come up with innovative solutions for our customers.
What is the common thread between these three areas of responsibility?
Joerissen: the element that connects these three areas are the lessons learned. Like in a closed circuit system, knowledge gained from risks and losses is fed back into customer dialogues and the optimization of risk portfolios via risk consulting.
What do you believe to be the most important advantages of the merger of Allianz Risk Consultants and AZT R&T?
Courage: The merger enables an improved feedback loop for claims experience and risk assessment. Catchword "magic triangle" - the connection between Underwriting, Claims and Risk Management. Through a simple internal decision and communication process we ensure that knowledge gleaned from losses find their way directly back into Underwriting.
What exactly is that way?
Courage: Knowledge gained from loss occurences flows into preventive risk management, benefits our customers in the form of risk consulting and thus further strengthens Underwriting. At the same time, as a result of the close interaction with our Key Account Managers, we ensure that the channel to the customer remains open, so that the risk dialog with AGCS customers can proceed in the best possible manner.
Joerissen: In this way major and very large losses as well as recurrent losses and new emerging risks are scrutinized, analyzed, assessed and included in the insurance assessment as additional expertise.
Can you give us an example?
Courage: A little more than two years ago there was a major fire in the press area of an auto manufacturer. It caused considerable property damage, business interruption lasting several months and large supply difficulties for the customer. Our first job was to establish the cause of the fire. Pressure surges occurred in the hydraulic pipe of a press which resulted in pressure well above the pipe's stress limit. This produced hairline cracks out of which hydraulic oil flowed, which then ignited when it came into contact with a heat conductor. The necessary consequence was to inspect identically constructed presses of this customer as well as of other customers, to inform them about the loss mechanism and to point out to them the necessity of carrying out checks on all pressurized components.
Aside from causes such as fire, can you give us another example?
Courage: A supplier – market leader in his segment - had to recall two of his products within a short period of time – running into millions of euros on each occasion. Following a product safety analysis by AZT R&T it was clear that without a comprehensive risk optimization the renewed coverage of the customer's product safety risk was jeopardized. The company was at risk of losing its insurance coverage, particularly in its target market, USA.
Consequently, together with the customer we analyzed and optimized the aspects of quality management, traceability, interfaces with customers and suppliers as well as the entire product safety organization at the customer's key plants. Moreover, crucial cost saving potentials were able to be realized through the introduction of a modern electronic traceability system. This cut inventory costs by 15 percent as a result of improved forecasting possibilities and reduced the time of capital being tied up by 35 percent.
Joerissen: in a nutshell, therefore, we are talking about considerable value added for our customers – our experience helps Allianz' industrial customers to better assess risks and thus ensure sustainable success. As a worldwide operating insurer of industrial and specialty risks, AGCS has the opportunity of asserting itself in a highly dynamic global market as a competent, long-term partner who is constantly gaining new knowledge in the field of risk management and thus of bringing Allianz as a whole into a better competitive position.
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