CPRI market rising to the challenge on claims says BPL

Black Lives Matter protest, Chicago, US. Credit: iStock/PaulMoody123

The specialty credit and political risk insurance market (CPRI) continues to pay claims in this increasingly complex and volatile global economic and political environment. But the full impact of Covid-19 on this specialty sector has yet to be fully felt, says London-based broker BPL Global.

BPL publishes an annual report on the CPRI market that shows a positive picture in terms of claims paid by insurers in this niche but increasingly important line for international risk managers.

The latest BPL Market Insight, based on a survey carried out in partnership with the Lloyd’s Market Association (LMA) and International Underwriting Association (IUA), shows that between 2007 and 2020 the CPRI market faced claims from banks and financial institutions that reached some $3.75bn. An impressive $3.63bn was paid in full.

The broker hints that the impact of the pandemic and associated political fallout will have an effect on this market but this has yet to be really felt and could take some time to “filter through”.

“While our claims team has been hard at work on various cases during 2020, increased claims activity as a direct result of the Covid-19 pandemic has not yet materialised, with the CPRI market still awaiting the full financial impact of the pandemic, which we think will take considerable time to filter through,” states the BPL report.

“As was true on the placing side, the market’s claims professionals responded well to the shift to remote working, with no noticeable impact on insurers’ claims handling,” adds the report.

BPL is keen to stress that, though complex, this is a secure market for policyholders from a claims perspective, as underlined by the figures.

“Since we were founded in 1983, we have settled nearly $3bn in claims. In all, 100% of claims made by banks and financial institutions in 2018, 2019 and 2020 were paid in full, with $3.7bn settled to such entities between 2007 and 2020 across the entire market,” states the broker.

“BPL Global alone handled 26% of these claims by value. Of the compromised claims (comprising 3% of the total number between 2007 and 2020), 44% of the amount claimed was still paid through settlements. In all of these instances, dispute arose due to the non-fulfilment of an obligation or term under the policy that was within the policyholder’s control, rather than the efficacy of the CPRI product itself,” it adds.

Commercial Risk is hosting a Claims Management Conference on 27-29 April 2021. We have worked with a number of European risk management associations to bring together a group of experts in a virtual forum to discuss how best to adapt to emerging long-term risk trends and explore the type of claims patterns that these new exposures are generating. Click here to secure your seat at the event.