“We have a policy of not commenting on our clients,” warned Marsh when asked by Paperjam about its activities in the grand duchy. The American group’s country manager for Luxembourg, Luc Verbiest, did not name anyone in . However, he did confirm the importance of the financial sector for the brokerage giant, the world leader in cyber-risk insurance.
Coming from Marsh Belux in Brussels, Verbiest took up his current position in January 2021. “When I arrived in Luxembourg, we defined a strategy focused on complex risks and the financial sector, including investment funds,” explains this specialist in complex risk management. With this in mind, in early 2024 he enlisted the services of a former banker, Fabrice Godefroid, with 27 years of experience in the funds sector.
“Although cyber risk is considerable, it has received very little attention in this sector,” points out Verbiest. “A striking example is the calculation of net asset value (NAV). If a cyber attack occurs during the mandatory publication period, the NAV calculation can be compromised, preventing the communication of values to investors. This can lead to significant mistrust and potentially cause investments in the fund to collapse when it reopens.”
The retail and small business service has been outsourced to a local broker.
Marsh’s country manager for Luxembourg has given his new fund expert the task of raising awareness of these risks within the industry. The target of the discussions: clients, but also the main associations in the sector, such as Alfi and the LPEA. Efforts are also focused on the Big 4, “with whom we are complementary rather than competitors,” explains Verbiest. It is also working with the Institut luxembourgeois des administrateurs (ILA) to include cybersecurity experts on boards of directors.
Although its customer base is dominated by the financial sector in Luxembourg, Marsh targets all major companies, says Verbiest: “Our customer base is very diverse and includes multinationals as well as local companies. We work with contractors, builders, developers and even parastatal or state companies. We also work with a number of local authorities.”
How does Marsh bring value to these businesses? “Our approach goes beyond simply providing insurance products. Since 2021, we have strategically expanded our offering to include the services of Oliver Wyman, Mercer and Guy Carpenter--the other companies in the Marsh McLennan Group. This allows us to work on a broader basis in terms of data, which is increasingly central to risk management.”
Jump in turnover
In the area of complex risks, Marsh distinguishes itself by generally writing its own tailor-made policies for its clients. “That’s why our focus has shifted to large companies, while the service to individuals and small businesses has been completely outsourced to a local broker,” says Verbiest.
For the time being, Marsh is satisfied with its strategy in Luxembourg. “We are continuing to grow and strengthen, particularly in the area of funds, a sector that we have begun to target more actively this year. The initial feedback since January has been very promising, and our relationships with the fund world and their associations are expanding rapidly.”
Since his arrival at the Luxembourg office, Verbiest has seen the local staff increase from seven to ten. While the number of policies has fallen drastically as a result of the repositioning on large companies, turnover has increased by more than 50% between 2020 and 2023.
Many of our customers buy cyber insurance for the services that go with it.
Behind this growth is the growth of cyber insurance. “When I arrived, apart from two or three financial institutions that were already insured, most of the market was not,’ recalls Verbiest. “At the beginning of 2021, cyber accounted for perhaps 3 to 4% of our turnover in Luxembourg. Today, it represents almost 10% of our revenues.”
But this revenue is not generated solely by cyber insurance. The Marsh representative stresses the growing importance of consulting services for clients in the area of risk management, including cyber. “Many of our international clients buy cyber insurance not for the insurance itself, but for the services that go with it, because you have instant access, 24 hours a day, seven days a week, to specialist service providers.”
Alongside the advisory activity, the development of the CSA (cyber self-assessment) represents the other evolution in Marsh’s cyber offering. This self-assessment tool is used to measure IT security maturity and gather underwriting information from organisations to place cyber insurance. It takes the form of a 250-point questionnaire (free of charge), which is constantly being adapted to reflect market developments and the questionnaires of cyber insurers worldwide.
No insurance products
“Based on the CSA, we draw up a report assessing our customers’ maturity in terms of IT security,” explains Verbiest. This report is essential for determining how risks are managed and whether part of these risks can be transferred to insurers. “If the customer wants to go into the insurance market, we prepare a specification. Once we have prepared it, we select a certain number of insurers that we want to approach, or that we suggest the customer should approach. This is followed by a phase of negotiations and comparisons of offers, where different options are presented to the customer.”
A particular feature of the Marsh model is that it does not sell insurers’ products, says Verbiest. “We have written our own text, which is accepted by the insurers. This approach allows Marsh to offer tailor-made solutions, negotiated globally with the big names in insurance.”
However, the Luxembourg market has certain limitations. “Not only is the capacity offered limited, but it is also restricted to a certain size of company, and not for all sectors of industry,” he notes. This is why Marsh is turning to international insurers capable of providing the necessary cover. Among these insurers, well-known names such as AIG, Allianz and Zurich dominate the market. While some have withdrawn, there are also new entrants, such as Beazley and Tokio Marine HCC.
This article was originally published in .