During its recent Investor Day presentation, Zurich Insurance Group laid out its ambitious targets for 2025-2027, one year ahead of the conclusion of the current cycle 2023-2025. With the further strengthening of its commercial franchise pinpointed as a top priority to help the group deliver these targets, what does that mean for the direction of Zurich’s commercial insurance strategy?
Offering insight, Sierra Signorelli (pictured), CEO of commercial insurance at Zurich, highlighted the pillars that underpin this strategy – focused growth, analytics, leveraging its capabilities, and simplifying the way it works. “When we presented at the Investor Day, one of the areas we talked about was the opportunity for growth for our business,” she said. “We have a very large and diverse portfolio today, our portfolio is profitable, and we believe that there are continued opportunities in the market.”
As to where this growth will materialise, she shared that Zurich is focusing on growth in areas that will support its further diversification – namely in middle-market and specialty lines. Even with a strong commercial lines brand, she said, middle-market isn’t an area where you can just “show up and be relevant”. With that in mind, the insurer has spent a number of years buying capabilities to support this segment, and it is continuing to see those efforts pay off.
A lot of companies talk about growing in the middle-market segment, she said, and the reality is that it’s an endeavour which needs to be considered and implemented thoughtfully. “It’s something we’ve taken seriously in developing propositions and in having response times that are market relevant to make sure that we’re being responsive in the market.”
In the US, Zurich has seen this segment’s portfolio double from 2020 to 2024, and it anticipates the continued and significant growth of that portfolio over the coming years. Turning to EMEA, she highlighted that the firm has also leveraged significant growth. Globally, the insurer has achieved double-digit growth since 2021 in its seven largest markets, which she identified as testament to the propositions it has developed and its capabilities as a group.
“We have a pretty significant market share in large corporate but we still see the opportunity to grow our share of the market in middle-market, by taking some of the capabilities that we have and making them relevant to the middle-market segment,” she said. “We expect to invest in 130 new team members across EMEA, so [it’s an area] where we’re going to continue to invest.”
With regard to specialty, Signorelli noted that there’s some areas where the brand already has a strong presence, and its strategy will be based on expanding that offering. One of the largest areas identified for growth is its E&S platform, which has a US focus. That’s an area where Zurich had pre-existing capabilities but has repositioned what it does in order to be better positioned for growth. “We continue to see an opportunity there and we know we have a relevant offering, and a strong brand to support it.”
Zurich also has strong propositions across a number of other areas of specialty, particularly in areas where it is already showing up quite well in the large corporate space. “We’ve also been investing in digital platforms to access segments of the middle-market. In marine, we have a marine platform to make us more efficient in the way in which we write cargo.
“We have credit lines where we have platforms in several of our European countries. We also have invested in Cowbell, which helps to provide access to the SME market when it comes to cyber.”
The question underpinning such movements is what’s happening from a rate perspective and, from Zurich’s perspective, rate is – in aggregate – positive. There’s a huge amount of variation across products, segments and geographies. “I would say though that in those areas that need rate most, we see significant rate coming through our portfolio,” she said. “And we would expect to continue to see that because, even though we have a strong result overall, there are areas such as US motor and liability, where it continues to be a challenge to make money.”
That’s where Zurich’s analytical capabilities really come into their own, she said, because effective use of analytics is what helps a firm better understand and navigate market conditions. Signorelli believes that part of the reason why there has been such a prolonged hard market is that amid the range of underlying trends driving loss costs, there are concerns on the horizon that could continue to keep those cost high.
“It'll be something that we need to keep an eye on,” she said. “But I do think that it'll help to drive discipline in the market. And I think, historically… [rate trends] used to be these severe spikes, where you'd have these shock losses that help replenish rate and there wasn't a lot of underlying data that was tracked.
“I do think that having better data across our portfolios, and the industry having better data as well, keeps this more disciplined, and keeps us from trailing too far off from a profitability perspective.”
