Capacity issues remain for Swedish risk managers

Swedish risk managers are still struggling to get the capacity they need despite an apparent softening of the market. While risks such as cyber and financial lines continue to be challenging, insurers are not providing the same level of coverage for mainstream classes like product liability as they have in the past. Meanwhile, the rise in natural catastrophe claims is having a knock-on impact for risk managers in terms of the information required by their insurers to place even the most standard risks. These were the views expressed by risk managers at a roundtable event held by Commercial Risk Europe ahead of the Swedish Risk Management Association (Swerma) annual congress. “While there has been a softening of the hard market in some areas, cyber remains a difficult market,” said Karl-Johan Rodert, risk manager at Autoliv, the Swedish supplier of automotive safety products, and also chairman of Swerma. “And nat cat remains a difficult market because of the number of events.” Globally, the insurance and reinsurance industry paid out more than 120 claims in excess of $1bn in 2022 for property damage and business interruption due to catastrophes, all of which has had a knock-on effect for all insurance companies. Even for companies operating solely in Scandinavia, there is no immunity from the impact of natural catastrophes, said Charlotte Herner, risk and insurance manager at Swedish construction firm Svevia. “What is happening in nat cat globally is increasingly influencing insurance coverage and risk management here in Sweden, especially in terms of supply chain risk. Nat cat will become the biggest problem for everyone in the future,” said Herner. “A lot of insurers are asking for details on supply chains and where your suppliers are based,” added Rodert. “They want to be sure they don’t have a concentration risk or an accumulation risk in terms of locations and the ports used.” There is also a greater selectiveness among insurers when it comes to providing coverage for more challenging risks, said Rodert. “I agree that cyber and financial lines have been challenging but capacity is the big issue across all lines – it has reduced so much,” said Henrik Paajarvi, group risk manager at the Norway-based packaging and insulation group BEWI and a Swerma board member. “Previously you could for example get $50m in capacity from one insurer but now the same has reduced to $25m or even $5m. It’s a huge difference and you now need more layers to cover the same risks. There is also a cost issue because the price of premiums is about the same even if the capacity has decreased significantly,” he said. That said, things could be worse. At the Swerma conference in 2022, the talk was of an impending energy crisis, exacerbated by the Russia-Ukraine war, the increased cost of commodities and the rise in inflation. These remain the most prominent risks facing companies, along with climate change, according to Laurence Eeckman, vice-president, group risk management and insurances at Swedish industrial manufacturer Atlas Copco. However they did not adversely impact this year’s renewals process, according to Herner. “We had a good renewals process this year. In 2021-2022, it was harder. The financial lines renewals were especially difficult due to the turbulence in financial markets and a risk for pandemic claims. But, having taken a deep breath after the pandemic, the insurers found claims not to be too high and now the costs seems to be easing up in that market. The biggest fear was probably the pandemic. “But next year, I believe the reinsurance market will be a big factor in the renewals process,” said Herner. “Reinsurers taken a hit in recent years so there may be a hardening in some places and more selectiveness over certain risks.” The selectiveness of insurers and requests for more information is likely to lead to greater division between standard and non-standard risks, said Rodert. “The more standard risks are softening for customers with good claims records. But the difficult risks are getting harder to place.” According to Eeckman, the market hasn’t softened yet but neither have premiums increased, except for casualty. And the hope is that good risk management will be reflected in more capacity. “We hope that conditions, wordings and pricing are based on individual risk management and not any more on insurers’ portfolio sanity,” she said. “It looks like that proper risk management has an impact, at least on available capacity.”

Capacity issues remain for Swedish risk managers

Capacity issues remain for Swedish risk managers

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