As insurers post better results, Spanish risk managers believe the time has come to return some of that windfall to clients through higher capacity and better services.
After years arguing that the hardening market was a necessary correction to balance their books, insurers have posted decent results that show the sector is back on a solid footing. So buyers from Spain think it is time for insurers change their approach that has seen the market hardening.
“As their results have improved, insurers need to put capacity back on the table. That would be the best service they can provide us,” said David González, director of risk and insurance at Sacyr. “What they can offer buyers is capacity at reasonable prices for covers that are better adapted to companies’ needs. In the past two years, many covers have been emptied of substance.”
Iván Delgado de Robles, risk manager at ACS Servicios y Concesiones, agreed.
“If they want to help their clients, insurers must allocate more capacity to make it easier to place risks, to eliminate some of the exclusions that have been imposed lately and, very importantly, to improve claims settlement processes. With the hard market, the settlement of claims has become much more complex,” he said.
The fact is that clients are distinctly unhappy to see underwriters making a big fuss about their good results in public, while claiming that they cannot offer better rates and conditions when discussing renewals.
“It looks great to me that insurance companies have posted excellent results of late. But it does not sound right that they boast about it. And it is even worse when brokers do it,” Delgado de Robles said. “After all, they are making money because rate increases have been out of proportion. Anyone can do it that way.”
Daniel San Millán, president of Spanish risk management association Igrea and risk manager at Ferrovial, said the situation today is “far too comfortable for insurers and brokers alike”.
He believes that even if a degree of market correction was expected, some of its consequences, such as a blanket disregard for risk management programmes, has been an excessive reaction to the previous soft market. And he is not optimistic that the situation will change in the near term.
“Right now, I cannot see the quality of risk management influencing decisions by underwriters. It is true that they are asking for two or three times as much information as they did before, which is not bad, but it does not seem that this is having the impact that it should,” San Millán said.
Lourdes Freiria, general director of risk and insurance at Grupo San José, believes that the insurance market is set to continue playing its key role in transferring corporate risks. “But for that, it is necessary that it once again provides solutions that are sustainable and acceptable for the companies that buy their covers,” she pointed out.
Meanwhile, San Millán has spotted some positive market trends, such as slightly more devolved power and decision-making in the hands of global carriers’ Spanish subsidiaries, although he noted this remains far below pre-pandemic levels. And there are small signs that competition among insurers could start to pick up steam, he added.
“I have talked to some insurance bosses who say that their headquarters are starting to make a little more pressure for growth. If that is the case, it will lead to a market that is a tad softer,” he said
But Delgado de Robles warned that M&A activity in the market could have the opposite effect and stifle the return of competition between insurers and brokers.
“Consolidation in the insurance market is something that risk managers must keep an eye on. A lack of alternatives in the market is a problem for companies,” he said.
Delgado de Robles also urged carriers and brokers to provide better services, particularly when it comes to global programmes.
“They must manage global programmes more efficiently. We have had issues with some of our leaders in the management of documents and red tape. In some departments, insurers and brokers are making us work with junior underwriters who do not have the knowledge required to work with complex projects. It is important to value experience in the market,” he said.