Illuminating Climate

Illuminating Climate

Profile interview: Wulff on advocacy and education at ICISA

Richard Wulff is the new Executive Director at the International Credit Insurance & Surety Association (ICISA). He talks to Katharine Morton for Berne Union about his ambitions and priorities for the association
Richard Wulff
Richard Wulff
Executive Director, International Credit Insurance & Surety Association (ICISA)
Katharine Morton
Katharine Morton
Trade, Treasury & Risk, TXF

Katharine Morton (KM): Congratulations on your new role. New offices for ICISA [near Amsterdam's Schiphol Airport], a new start. Tell us a little bit about your journey.

Richard Wulff (RW): Thanks so much. It was indeed quite a journey. I started my working life in 1989 as a credit limit underwriter in NCM Amsterdam before being asked to lead the reinsurance department. This turned out to be the start of a ‘world-wide tour’, living and working in Dublin, Munich, Mumbai, Sydney, Hong Kong and back to my native Rotterdam. My main field has always been trade credit, surety and political risk insurance and reinsurance working with three groups: NCM, Munich Re and QBE.

KM: You mention working in a variety of interesting markets. How, for instance, did working in emerging Asia impact your view of the global insurance market?

RW: Working in emerging markets was one of my greatest learning experiences. The predictability and ease of life that western Europeans take for granted is anything but normal in places like India. One learns to be resourceful and to improvise as detailed planning (whilst always useful) doesn’t always prove to be in line with changing realities in emerging markets.

The COVID-19 pandemic has stimulated people throughout the entire world to look differently at their daily routines, habits, and procedures. In some ways, people and companies in the so-called developed world have been learning what has always been common practice in emerging markets.

KM: What are your priorities and vision for ICISA – what direction are your members prioritising?

RW: ICISA’s priorities are clear: advocating for our members, educating our target audiences on the role our members play within economies and to promote best practice amongst our members.

The first two functions start with explaining what trade credit insurance and surety are. Any industry practitioner knows what it’s like to explain his/her profession at a birthday party. We’ve all learned to be brief and easy to understand to avoid attracting yawns. By getting our advocacy and PR function right, we look to have an (at least) semi-informed group of people that should be informed. Examples of these groups are regulators, governments, and the financial community.

The promotion of best practice is extremely important to avoid a small number of market participants tainting the industry by writing risks that attract bad publicity. I’m happy to say that all our members take this extremely seriously and act accordingly. This was proven by a recent high-profile case involving supply chain financing, an otherwise valuable field of business when underwritten correctly.

KM: How do you think the private market is changing – particularly in terms of ESG priorities? Do you think ICISA should take up an advocacy position on ESG?

RW: The private market is changing in a number of ways, some of that was instigated by the global financial crisis (GFC) of 2007-2009. This has prompted regulators throughout the world to look very closely at security and capital adequacy of participants in financial markets. Even before the GFC, the focus was primarily on capital adequacy of banks. The GFC has sped up this process. With the advent and implementation of Solvency II in the EU and similar regulation outside of the EU, insurance companies have felt its influence.

ESG aspects are now being brought into this arena. Regulators are starting to take a keen interest in what companies are doing in the field of sustainability (both operationally in their underwriting and in their investment portfolios). There are indications that ESG criteria are to be included in capital modelling.

We see it as a core function of ICISA to contribute to members’ education in this fast-moving field. We believe that sustainability will be one of the most important topics of the coming years and have been clearly told by our members that they take their responsibility in this field seriously.

The other way in which the market in general is changing, is by supplementing knowhow with actuarial, technical, logistical, and marketing skills (to name but a few). As little as 10 years ago, it was unusual for someone to enter the industry from outside in a specialist or managerial position. We have become more aware of the limitations of only hiring credit and surety specialists. As a result, we are increasingly open to skills that used to be regarded as foreign to our industry. This has been very enriching and has promoted innovation in the industry of products, processes, and tools.

KM: What about the role of digitisation – where are we now and does trade digitisation have traction with ICISA members?

RW: 30 years ago, it was not uncommon to take weeks to establish policies and credit limits. This is simply not acceptable in the current environment. The first signs of automation were seen in the 1980s with mainframe databases and primitive data hook-ups to information providers, clients and distribution partners.

Automatic underwriting on basis of statistical information followed in the 1980s and 1990s. True digitisation followed by putting (artificial) intelligence into every aspect of the business at the service of credit insurance clients. Using and partly integrating an ecosystem of tech companies to supplement tools and skills has become normal practice. Within ICISA, we are running two blockchain projects for our members with outside experts to serve the industry.

KM: Do you think there is a potential/actual divergence in wants and needs between the private and public markets’ interests? How can that be resolved?

RW: The private and public markets are essentially complementary to each other. If we take the industry’s clients as the starting point, the client will select the supplier that will best satisfy his/her needs. This is true in any industry, as it is in ours. In practice we see short-term trade credit business going largely to the private market, which has invested heavily in technology and distribution. This is a competitive market backed by major capacity providers in the form of hard capital (shareholders) and soft capital (reinsurers, capital market instruments). Due to their scale, these private companies offer a standardised or modular product to most of the market and tailor-made short-term solutions to the largest of insurance buyers.

The public sector is excellent in offering individual products where the risk profile is non-standard, such as due to the location of the buyer or longer tenors. The best way to treat any overlaps is to offer a free choice to our mutual clients. Where there is direct competition between private and public players, it is important that this is open, free and fair. This is ultimately in the best interests of not only the client, but the industry too, because this will drive greater innovation and best practice.

KM: Where do you foresee ICISA in five years?

RW: ICISA is and always will be a vibrant community sharing ideas and advancing the industry of trade credit insurance and surety. This will not change. The topics of conversation will evolve naturally with what the market requires of us. However, ICISA will not work in isolation. It is in everyone’s interest to work with our fellow industry bodies such as PASA, SFAA, Berne Union, ITFA, FCI and others. We have a common interest: promoting trade and industry.

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