Buyers disappointed with insurers’ ‘profit-driven’ Covid-19 response: Ludlow

Covid-19 presents an “unprecedented opportunity” for risk managers, who feel let down by the insurance industry's “profit-driven” response to Covid-19, according to John Ludlow, chief executive of Airmic. Opening the UK risk management association’s three-day virtual annual conference, Mr Ludlow railed against the insurance industry’s response to the coronavirus outbreak, which has accelerated market hardening. However, the Airmic CEO also urged risk managers to grasp the opportunities presented by Covid-19 and put the profession “centre stage”. According to Mr Ludlow, insurance buyers were already concerned at the start of 2020 by the hardening market, which had seen price increases, reductions in capacity and a growing trend towards exclusions. “Covid-19 has since compounded the problem,” he told Airmic members in a live address on Tuesday. According to Mr Ludlow, buyers are “frustrated” and “disappointed” by the insurance industry’s response to the pandemic amid an already hardening market. Given the challenges of lockdown and economic fallout from Covid-19, corporate policyholders were looking to the industry for “support in a time of need”, he said. Instead, the response from insurers has been “profit-driven” and “inflexible”, and not what would be expected from the “business partners insurers claim to be”. Mr Ludlow said there could be “no excuse” for some insurers’ actions, such as communicating underwriting changes at the last minute during renewals. Buyers need more proactive and fair communication about changes related to the hardening market and Covid-19, he said. “Collaboration will be key to unlocking innovation,” said Mr Ludlow, adding that risk managers want the insurance industry to succeed. There needs to be innovation in business interruption insurance after “inadequacies” were laid bare by Covid-19, he said. The Airmic CEO cautioned risk professionals against “pandemic tunnel vision”, where organisations are “consumed” by Covid-19 to the detriment of other risks, including climate change, technology and Brexit. He also warned risk managers about a “cascade” of emerging risks arising from the pandemic, such as economic and societal changes that are already underway. In particular, he sees potential for growing social unrest and “discontent” in the coming years from “tinder-dry” populations around the world. “It is our role as risk professionals to open the eyes of senior management to the possibilities and ask the critical questions. This is a great opportunity for risk professionals to take centre stage and partner with the board. This is an unprecedented time of opportunity for our profession,” said Mr Ludlow. The past nine months had demonstrated the benefits of collaboration and an enterprise-based approach to risk management, according to Airmic’s CEO. It showed risk management can’t be a “box-ticking exercise”, he continued. Organisations with the most mature risk management, and risk leadership from the top, responded better to the crisis, he added. “The crisis management rulebook has been torn up,” said Mr Ludlow, who urged risk managers to use the experience of Covid-19 to think innovatively. “For me, the biggest risk today is slipping back into our pre-Covid ways. If society changes, risk management must change,” he said.

Buyers disappointed with insurers’ ‘profit-driven’ Covid-19 response: Ludlow

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Want to read this article?

Read Next

UN launches new net-zero insurance forum

Pen extends capacity deal with Zurich in Republic of Ireland

Mapfre Global Risks boosts profit by 58% despite reduced premiums

Talanx confident of ‘significantly exceeding’ full-year forecast

The Netherlands sued over PFAS contamination

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