The commercial insurance landscape in Western Europe is changing. The good old days of capital-based competition will soon be gone. Instead, knowledge of the risk profiles and financing and service needs of individual corporate customers is fast becoming the only currency that counts.

The signs are already visible. Commercial carriers are increasingly diversifying into risk management and financing services, while reinsurers are consolidating and using their superior risk knowledge to approach corporate customers directly. Brokers are joining forces and offering a greater range of fee-based services, corporate customers are adopting more professional approaches to risk management, and even investment banks are entering the arena.

These developments are the outward manifestations of a Europe-wide transition from capital- to knowledge-based competition. In capital-based competition, capacity or the ability to absorb event risk is the most important factor. Knowledge-based competition, which has shaped the face of the US industry for more than 15 years, has already taken hold in the more advanced European markets such as the United Kingdom and Scandinavia. In knowledge-based competition, it is the detailed understanding of risk profiles, claim patterns, and corporate customers’ ability to finance risk that matters most. Coverage structuring or solution engineering is steadily overtaking...