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Airmic member survey points to less harsh renewals in 2022

UK risk and insurance managers still perceive the commercial insurance market as hard and prices are expected to continue to rise in some cases during coming renewals. But Airmic’s pulse survey of members, published as the association meets for its annual conference in Brighton, reveals that a decent proportion expect conditions to improve with lower premium increases and less coverage limitations imposed.

Airmic CEO Julia Graham said the insurance market has listened to calls from the UK risk and insurance management association, as well its peers across Europe, and made a genuine effort to rebuild confidence after a difficult couple of years that have tested relationships.

Corporate insurance buyers have struggled to find adequate capacity at affordable prices, particularly in high-profile areas such as cyber and D&O, during recent renewals in the UK and across Europe. Disputes over business interruption coverage for Covid-19-related losses have not helped. But Airmic members are hoping for a less testing time in coming renewals.

Cyber is in sharp focus currently, with claims rising fast and insurers pulling capacity as they wake up to the potential impact of systemic risk. But while premium increases of 400% have been reported by some Airmic members, the good news is that claims are being paid without undue fuss, based on Airmic’s survey.

Captives are being used to help soften the blow in this increasingly critical line of business as insurers and reinsurers reconsider their position. But there does not appear to be a sense of panic among the Airmic membership, based on this survey.

Graham said the survey indicates that there are signs of the green shoots of recovery after a difficult few years that shocked many risk and insurance managers who had not experienced a hard market before.

“Will Spring bring continued growth in the green shoots we are seeing? We not only see premium and cover green shoots, but a genuine effort from the market in building or rebuilding relationship bridges with our members. This overall scenario gives us some optimism for a better 2022,” she commented.

Graham also urged insurers to step up their investment in technology and risk analysis to keep up with Airmic members’ evolving needs.

“The market needs to energise its efforts to keep up with the opportunities available through technology and be conscious of more sophisticated use of analysis of data, and new risk financing models and mechanisms creeping up on out-of-date solutions with some internally-focused practices. Our members work with organisations that are harnessing technology, and the market needs to avoid falling behind them,” she said.

Airmic’s survey found that the insurance market is still perceived as “hard” by an overwhelming majority of respondents (91.7%), with the remainder neutral. This is based on the fact that capacity is still at least matched by demand, while prices are seen as “robust” and in some cases still rising. Some 50% of survey respondents felt the market was still deteriorating.

The association said, however, there are signs of improvement emerging in market conditions. “A number of members report an easing back of premium rate increases and cover limitations. While challenges remain for large commercial buyers seeking programme capacity, the outlook into 2022 looks – albeit cautiously – somewhat more positive,” said Airmic.

Respondents were split on their view of the market direction next year. Some 38% expect a deterioration, 29% expect an improvement and 33% expect it to remain consistent.

Airmic reported that a majority of respondents (69%) said their organisation had at least one insurance captive in operation. Some 17% of respondents said their organisation is contemplating setting up captive if they did not already have one in place.

Airmic said those members that buy cyber insurance who have had a claim, have been paid. The survey shows that employee education and email defences are the most likely cyber risk controls. Data breach advisers and security advisers are, by a significant margin, the most likely first points of contact following a cyber incident

“Premium rates for cyber are rising and increases of over 400% have been seen for the first time in these surveys. Cyber risks are the most likely new risks to be financed by captives,” said Airmic.

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