Airmic members say market hardening has slowed but cyber remains problematic

Leading members of UK risk and insurance management association Airmic report that the pace of insurance market hardening has slowed since late last year and there are signs of “green shoots” for buyers, but concerns remain that conditions could deteriorate.

However, Airmic’s latest member pulse survey reveals that things are still very difficult for UK cyber buyers, where premium rates “skyrocketed” in Q1. One tenth of respondents experienced rate increases of more than 400%.

Airmic also says that survey respondents have sounded a “dire warning” to the London market that its legacy systems will “doom it to irrelevance”.

The survey of Airmic’s leadership group of risk professionals was conducted in March and found that 70% feel the commercial insurance market is hard, with 30% describing it as neutral. No one described it as soft. This compares with 92% perceiving it as hard and just 8% neutral when Airmic conducted its previous pulse survey in the third quarter of last year.

Fewer respondents said the unavailability of cover at an affordable premium is a problem in the latest poll, but reduced capacity remains an issue for three quarters of insurance buyers surveyed in March.

“Premium rates, and the scope of cover and capacity, have continued to disappoint,” says Airmic in its Harsh Market March 2022 report detailing the survey findings. “Nevertheless, the latest survey results here suggest signs of ‘green shoots’ where the pace of the hardening is slowing, in line with other surveys on the market. But we are not out of the woods yet and premium rates for cyber are skyrocketing,” it adds.

Airmic says that while record rate premium increases for cyber are tapering, increases of more than 100% are still common.

The survey also found that UK buyers are increasingly satisfied with their insurers and brokers, in line with market improvements.

Broker satisfaction has improved the most, with 27% very satisfied, 64% somewhat satisfied and 9% not satisfied in the latest poll. This compares with 21% being very satisfied, 63% somewhat satisfied and 16% not satisfied back in Q3 2021.

Satisfaction with insurers has improved too. Some 9% of Airmic members said they were very satisfied with their insurers in the latest survey, with 77% somewhat satisfied and 14% not satisfied. Back in Q3 last year, 5% were very satisfied, 79% somewhat satisfied and 16% not satisfied.

The survey also focuses on challenges facing the London insurance market.

A third of respondents said the London market’s current IT infrastructure system isn’t fit for purpose at all. The rest said it isn’t fit for purpose but there are signs of improvement. Lack of collaboration between insurers was cited as the biggest obstacle to improving the market’s infrastructure.

“The legacy systems of the London market will act as a millstone around its neck unless it takes much bolder strides towards the digital and talent transformation required for its post-pandemic future,” says Airmic. “Current insurers will lose business to more modern, agile insurance competitors,” if things don’t improve, it adds.

The association believes greater investment and understanding of technology among the market’s decision-makers are critical to improving its infrastructure.

Meanwhile, 30% of Airmic members polled believe the London market’s influence has waned since Brexit. Some 65% believe it hasn’t changed and 5% think it has strengthened.

“London used to be the European Union’s hub for financial services but Brexit has led insurers to shift decision-making powers back to their headquarters in other countries. Continued focus on regulation, talent, sustainability and evolving consumer preferences will be crucial to securing the London market’s global competitiveness,” states Airmic.