QBE European Operations plc

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QBE European Operations plc Annual report 2011 22 Risk management continued Insurance risk QBE EO accepts appropriate insurance risk to enable it to meet its objectives. To ensure that we balance insurance risk with reward, all underwriting divisions are expected to achieve measurable performance targets by operating within the limits and authorities of our risk appetite framework and business plans. Business plan parameters include a range of limits and authorities, including maximum line size, premium allocation by class, sub-class and geographic spread, underwriting authorities, aggregation limits and reinsurance strategy. Business performance is measured by return on capital, where economic capital is allocated to business areas based on the level of assessed risk. Underwriters use benchmarking models to ensure the appropriate premium is charged for each risk exposure. Credit risk A certain amount of credit risk is unavoidable, as it can arise as a result of the inability or slow payment by counterparties. Exposure to credit risk is limited as far as practical and QBE EO has established detailed guidelines, security assessments, limits and monitoring requirements to mitigate credit risk. Liquidity risk The objectives with regard to liquidity risk management are to ensure that the business remains solvent by a significant margin; and all funding requirements can be met out of readily available sources of funding. The business maintains a strong liquidity position (by holding its assets in high quality liquid funds) and would meet any major unexpected cash outflow by using its existing resources as well as support provided by other companies within the Group. Market risk Exposure to market risk is managed through the investment strategy, which reflects the appetite of the board. The strategy is deliberately conservative in order to eliminate potential volatility from market fluctuations as much as possible whilst still delivering an acceptable absolute return. Operational risk The principal objective in managing operational risk is to identify, assess and manage risks and to reduce any failures or inadequacies in processes, people and systems (including regulatory risk). We mitigate operational risk by ensuring that we have an effective infrastructure, robust systems and controls and experienced and qualified individuals throughout the organisation. Group risk QBE EO derives significant benefits from being part of QBE and part of the Lloyd’s Franchise and primarily manages Group risk through its strong relationships with them. Our business objectives are aligned with QBE’s strategy and with Lloyd’s Franchise strategic imperatives; where appropriate, the boards follow relevant Group and franchise policies, guidelines and reporting requirements.
QBE European Operations plc Annual report 2011 23 Delivers reliable and responsive service at every stage of the stakeholder experience By understanding the market better and, in particular, the risks associated with a product, QBE EO is more responsive and able to deliver solutions to everyone’s requirements. QBE EO places great emphasis on risk management, with regular newsletters and forums held addressing the key risk issues facing clients. The approach when managing claims is always sympathetic and understanding of clients’ needs. Case study: QBE Rehabilitation wins Post magazine Rehab First Awards In 2011, QBE became the first ever insurer to win the Rehabilitation Initiative of the Year award for a third time at the Post Magazine Rehab First Awards. The award was a welcome acknowledgement of our continued commitment to offering market-leading service. Business operations Rehabilitation is an important part of the service QBE EO offers its clients. The benefits of getting sick or injured employees back to work as quickly as possible – and before they get to the stage of making a claim – benefits them as well as their employers. An analysis of our award-winning RIDDOR Minor Injury Management service showed that employees returned to work 29% more quickly than they would otherwise have done. Treating people at an early stage not only helps them to recover more speedily, it also saves around £1,200 a claim. Indeed, over a four year period, one client saved just under £1 million in hidden business costs. We are working to raise awareness of the scheme with brokers, as well as with our clients, the employers and their employees. For employees to realise that the company they work for has a scheme in place to help them if they are sick or injured leads to their increased commitment – and, of course, more engaged employees lead to better results – whilst it saves costs for employers. In addition, by giving a company a reputation as a caring employer, it increases the value of its brand and by helping it to plan for absentee cover it enables it to run its businesses more efficiently. QBE EO, which has made a considerable investment in developing the rehabilitation service, is putting it at the heart of the claims process to ensure that rehabilitation is available to more injured parties. The members of the rehabilitation team are all skilled clinicians: nurses, occupational therapists, physiotherapists and sports therapists. Two of the team are based in London, one each in Chelmsford, Bristol and Leeds. They use their expert knowledge in managing clients and suppliers, working with our underwriters to meet customers’ needs and in developing projects and products.
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