French mid-sized companies struggle to find cover

Mid-sized companies in France struggled to find adequate coverage during their latest renewals but large risk buyers report an improvement in market conditions at year-end. Speaking at the 30th Rencontres de l’AMRAE in Deauville, leaders of mid-sized companies said they faced increasingly complicated underwriting forms and higher deductible requirements from insurers. The situation has taken a toll on their risk management resources, which are often headed by their top managers, and have led some firms to consider the costly option of setting up a captive. Alain Lemaire, secretary general of the association of mid-sized companies in the Nouvelle Aquitaine region, said that deductibles have risen from €30,000 to €1m in some cases for member firms. He stressed that his company, a winery, needs to have comprehensive covers in place for risks such as a fire. But the company has had to fight for its insurance of late because of the amount of wooden materials involved in the production chain. “One risk I would like to highlight is that a company in the wood-processing sector cannot find insurance coverage,” he said. Véronique Mauget, secretary general of cask producer Chêne & Cie, knows this experience well. She told the audience that not even remaining loyal to the same underwriter for many years was enough to guarantee her company the protection it needs in the current market. “We had purchased insurance from an insurer for seven or eight years but in 2020 this company flatly told us that it would stop selling us coverage by the end of the year. There was no particular reason for that decision,” she said. “We went to the market only to find that several insurers did not want to take our risks because we work in the wood sector, despite the fact we employ very high-quality production processes,” said Mauget. With the help of brokers, she managed to close a deal with a group of four different insurers. The company now pays €100,000 in premiums. “It is a lot for a company of our size,” she said Mauget. “And every new renewal is now a problem for us.” Mauget also said that her company has had a cyber policy for three years but she is not sure whether it will be able to maintain the cover for long. Policy forms are getting increasingly complicated and insurers demands are growing, she remarked. The more demanding forms issued by insurers at renewal in lines such as cyber are causing angst all over Europe, and France is no different. A call for a more harmonised approach from insurers is subsequently rising. Lemaire explained that each insurer has its own forms and they are all becoming more complex to complete. This all means plenty of extra work for companies that want to search for the best policies in the market. “Please harmonise your forms,” he asked insurers attending the session. The hard market is persuading mid-sized companies to look into the potential of captives following December’s approval of new risk-retention rules in France. “We are looking at it, for sure. It was not possible [to have a captive] with the previous legislation, but now it is,” said Christophe Gelineau, head of management and finances at Piveteau, a producer of building materials. “We need to look deep into it because it is a complex and costly process. In the future it could be an important tool for mid-sized companies.” Lemaire believes that captives could help mid-sized firms finance higher deductibles. The mood was more buoyant among large risk buyers, brokers and underwriters who participated in the conference’s closing panel debate. They said that the latest renewals were still characterised by rising rates but were less challenging than in the past couple of years for French corporations. Michel Josset, a member AMRAE’s board, said that insurers went back to technical underwriting during January renewals. Fabrice Domage, the president of Marsh France, agreed. He said there is ample capacity in the market and even rising cyber rates appear to have stabilised a bit. He hopes that improvements in insurers’ investment income, thanks to higher interest rates, will have a positive impact for buyers in future renewals.

French mid-sized companies struggle to find cover

Captives an increasingly attractive option

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