Zurich NA CEO highlights priorities in 2025–2027 plan

A year ahead of schedule, Zurich Insurance Group shared a new three-year business plan at Zurich Investor Day 2024. The new 2025-2027 plan is not just a collection of financial goals, but a more holistic plan outlining priorities and actions to best serve the risk management needs of businesses and individuals in a time of warp-speed change. Group CEO Mario Greco announced the new three-year plan because the Group is on track to exceed all of the targets in its 2023-2025 plan, a year ahead of the conclusion of that plan cycle. Zurich North America, as the largest regional contributor to the Group’s financial results, has played a key role in charting the path ahead. 

So, what is ahead for Zurich North America’s businesses, and what will it mean for Zurich customers and distributors? North America CEO Kristof Terryn, together with Alex Wells, Head of U.S. Middle Market, and Dalynn Hoch, Head of RCIS, Zurich’s crop insurance business in the U.S., shed light on that during breakout sessions at Investor Day and in a follow-up Q&A series, which starts with our CEO here.

Q: The Group did well the past few years, in some cases reaching new highs. The new 2025-2027 plan raises the bar to the highest targets in the Group’s history — why?

Terryn: The Group has transformed over the past eight years, delivering quarter-on-quarter, year-on-year growth by focusing on customers, simplification and innovation. Those three pillars of our strategy are not changing, because they are working. But the economic and geopolitical environment as well as the insurance market have changed since our last strategic plan was launched for 2023-2025. We see new opportunities for us to leverage our capabilities and our financial strength to help our distributors and customers manage evolving risks.

Q: How have some of the recent actions in North America, and the contributions those made to the Group, influenced the new plan for 2025-2027?

Terryn: Looking at past performance, we grew double digits year over year over the last three years, and a couple of things have driven that. We’ve invested in lines where our brokers and customers have been seeking more solutions and options, particularly the Middle Market segment, Specialties, and Excess & Surplus. 

We have also made great improvements in certain areas of the portfolio. One good example of that is Canada. Canada, back in 2019, was a loss-making business. No longer is that the case. Canada reduced its combined ratio by double digits, and we have roughly doubled the size of that business.

In the U.S. and Canada, we took actions to improve the Property portfolio, getting granular in the data analysis, and investing in risk improvements, especially around growing risks such as surface water flooding. We reduced our peak exposures and saw similar improvement in combined ratios.

Our financial strength enables us to continue to develop and provide excellent, innovative solutions and services as risks evolve. It enables us to help our customers build resilience to risks such as severe weather and to manage through unexpected events. 

This strength also positions us to pursue additional opportunities to grow our Middle Market and Specialties business significantly in 2025-2027.

Q: Kristof, you mentioned getting more granular in data analysis. Can you give an example?

Terryn: One example in Property is in flood-related risk and understanding the changing impact of higher humidity on the weather. In the early part of this decade, Zurich — as did the entire industry — largely used FEMA (Federal Emergency Management Agency) government-provided maps that focused on river flooding to determine what’s considered a flood zone across the U.S.

As we saw an increased impact from surface water flooding that can happen far from bodies of water, we invested in structuring and understanding our own proprietary data on floods. We overlaid surface water precipitation-driven flood risk on top of that FEMA river flooding. That has led to adjusting our portfolio, in some cases reducing limits while at the same time delivering sharper insights for our policyholders to help them build resilience to this growing risk. This kind of data-driven insight helps us more deliberately shape and steer our portfolios.

In Casualty, what we’ve gotten much more granular on is understanding the risk drivers by jurisdiction, class of business and industry. In Construction, for example, we’ve not just gotten granular on the data analysis, but we’ve also leveraged technology to help bring losses down for our customers. On New York construction sites, our customers now employ AI-powered cameras so they can identify critical movements of workers on the site to reduce risks of falls and strain injuries. These cameras aren’t just used to correct unsafe behavior but also to catch crews doing things correctly, and to recognize and reward safety at crew meetings.

This increasingly technical understanding makes all the difference in portfolio quality, which will remain a driving force for performance, underpinned by a continued focus on underwriting discipline.

Q: When dealing with risks, there will always be key challenges. What are some you’ve seen over the past three years?

Terryn: The growing trend of legal system abuse, often called social inflation, is very important for us to understand across liability lines. For instance, we’ve seen that the state you’re in can have an outsized influence on jury awards in liability cases.

When we understand these dynamics, we can make more tailored decisions on terms and conditions, deductibles and limits that we can deploy. And we can voice our perspective at the government and regulatory level for a level playing field, such as by advocating for disclosure to juries when a third party is funding a plaintiff’s legal action. That third-party funding can create incentives to elevate jury awards far beyond the facts of the case. Right now, disclosure of such funding isn’t required in most states.

Higher awards and legal system abuse can increase loss costs for insurers. Loss costs can have an impact on insurance premiums for businesses, with financial impacts for everyday consumers. You hear the term nuclear verdicts and now you’re hearing thermonuclear verdicts as the amounts in these jury awards soar.

Auto has been an industrywide area of concern. We’ve focused on improving our portfolio mix and again understanding the dynamics at a more granular level. We’re educating customers on some of the resources that can help them protect their people and their fleets, including telematics that can monitor driver behavior to help identify and intervene on key risks such as phone use and excessive speed.

Q: The new plan is for Zurich across all regions around the world. But North America plays a key part in it. So, Kristof, how does what you’ve shared so far tee things up for the next three-year cycle in North America?

Terryn: Zurich around the world has some retail and personal lines offerings. In North America, we are primarily a commercial insurance provider to businesses, including Fortune 500 as well as midmarket, auto dealers, farmers and other businesses.

In terms of accelerating growth, two business segments we will be particularly focused on are Middle Market, which includes our sizable Programs business, and Specialties. Alex can talk more about the Middle Market focus (in the next Q&A). But one aspect is that we will continue to expand teams of dedicated underwriters in focused industries where there is strong growth.

The E&S market is now 25% of the overall U.S. P&C market, with a higher growth rate and better profitability. At ZNA, we’ve repositioned the E&S book as a standalone business unit targeted toward Middle Market customers. We expect to see continued momentum and double-digit growth for this business going forward.

For Specialties, we will focus on Financial Lines, Construction, Accident & Health, Surety and Energy.

Our large corporate business has been a strong contributor to our success, and we will maintain it with a focus on portfolio quality.

Q: Data and AI are on everyone’s minds, especially in terms of balancing that with people. What is our focus there?

Terryn: We will never stop working to attract, train, develop and retain the best people with top-notch technical skills and a continuous learning mindset. Continuous learning is critical today to keep up with the pace of change.

Prioritizing people is compatible with our data and AI strategy. We will work to improve operational efficiency by scaling digital solutions and leveraging AI to eliminate some of the more routine tasks that our people don’t enjoy and that a machine can perform in some cases faster and reliably.

But machines don’t replace human judgment in the context of unique sets of risks to assess. Insurance, even today, remains a relationship business. Speaking of which, we will focus on growth with key regional and national brokers, who are integral to our success and that of our mutual customers.