Labour forces dominate UK insurance market thinking

The ‘great resignation’ is very much a fact of business life in 2022, even though it is not being discussed as much as it should be, says Stephanie Ogden, country manager for HDI Global UK and Ireland, who believes that the shifting sands of the employment market are impacting the insurance sector as a whole.

“People are coming out of the pandemic with different views of how they want to live their lives. Many do not want a standard nine-to-five job anymore and that is having a huge impact,” she says.

“It is not just about us as insurers, it’s also affecting our clients,” adds Ogden.

She fears that ultimately it might affect the risk profile of companies, as the battle intensifies to ensure the right people are doing the right jobs. It is also hard to predict how long term the trend will last, but for now it is presenting real challenges for everyone, says the insurer. 

Supply chain

Ogden also points to supply chain as a growing risk. “We are having many conversations about supply chain risks, and related to this, how we should be reserving for the cost of future claims. Previous modelling is not necessarily appropriate nor applicable,” she says.

Ogden says insurers are talking to clients to ensure they are sufficiently covered for growing costs and are reviewing policies. But she warns: “I am not sure it is enough.” 

Her concern lies in the rapidly rising costs of energy, exaggerated by the Ukraine war, combined with the geopolitical shifts we are seeing.  

“We are in an environment which feels more volatile than ever,” says Ogden. 

Every cloud

But one silver lining Ogden identifies is that insurance has grown in importance around boardroom tables. “I think pre-Covid-19, in the majority of circumstances, insurance was discussed once a year at renewal and that was that. But it is now fast becoming a standing board agenda item,” she says. 

And within the insurance sector, the relationship between broker and insurer is starting to change, she continues. This is something Ogden encourages as brokers and insurers increase their dialogue. “As a tripartite relationship with the client, we all work together on potential pinch points and look for solutions,” explains the insurer.

ESG

More open discussions also help in the growing ESG environment because they allow insurers to deliver the right solutions to their clients at the right time. 

Ogden, however, has a word of warning. “No-one should be paying lip service to ESG – this is something that must go right through the business. None of us can afford to ignore the wider environment around us,” she says.

Ogden believes that insurers can enable clients to make a smooth transition from fossil fuels through continuous dialogue, so that both clients and insurer can understand the changing nature of their risks.

Wordings

She also feels that it is time for the insurance industry to stop arguing over every single policy wording and acknowledge that insurance was designed to help clients in an emergency. 

Greater innovation around wordings will support evolution and continue to make the industry more client-centric, she adds.

Technology will have a crucial role to play in this, enabling insurers and clients to better match their requirements. But there is still more investment needed before the insurance industry maximises the benefits of the digital age, adds Ogden.

Costs

Above all, she is aware of the need for clients to reduce costs where possible. Some of that might come from the better use of technology, but it might also come from a switch away from traditional markets to alternative risk transfer solutions.

Captives lead the way, and conversations continue with many clients about captive solutions, says Ogden. However, they are not for everyone and require enormous commitment and investment from clients, she adds. 

Conversation is critical at every stage of the process and that it unlikely to change in the year ahead, she concludes.