Risk managers say insurers are failing Portuguese companies on workers comp

Insurers are failing Portuguese companies by not providing insurance solutions for workers’ compensation risks, a mandatory cover in the country, according to leading risk managers. The problem is particularly acute for state-controlled companies, an important segment of Portugal’s business world that must follow competitive procurement rules to purchase insurance. “In the public sector, workplace accident insurance tenders are empty. Even when the company’s loss ratio is good, the market is staying away from the risk,” said Antonio Negreiros Fernandes, secretary-general of Portugal’s risk management association Apogeris. “Price does not seem to be a problem, but the market needs to step up and develop a solution for this problem,” he added. “Portugal faces a unique situation in terms of workers’ compensation. Only Belgium has a similar regime to ours, with large scale liabilities and long maturities,” said Luis Filipe Caldas, a member of Apogeris’ board. The situation is compounded by the fact there is less competition in Portugal’s insurance market thanks to mergers and acquisitions, both at home and abroad. “In the workers’ compensation sector, there are few carriers that can offer us capacity. If one of them is up for sale, it becomes a problem especially at renewal time. We cannot retain workers’ compensation risks, we cannot arrange a reinsurance structure as we are not authorised by the authorities, and we cannot look for partners abroad to provide capacity to local insurers. So, our hands and feet are tied,” said Jorge Neto, insurance manager at retail group Jerónimo Martins. “It is clear that when we add the M&A effects to a hard market, the room to manoeuvre gets extremely narrow. For instance, in the case of insurance tenders put out by state companies, we notice that a huge number have been ignored by insurers. For others, there is only one candidate,” added Pedro Nazaré, director of general services at Infraestruturas de Portugal, the rail and roads operator. “This mix of factors is very worrying, as market trends can restrict the options that a state company has to place mandatory insurance coverages,” he added. Meanwhile, there are other concerns for the Portuguese insurance market and its customers. “A little over two years ago, the combined ratio for workers’ compensation insurance in Portugal reached 134%. However, in the meantime, ratios have deteriorated in motor insurance,” said Mr Nazaré. “Those two segments amount to more than half the non-life sector in the Portuguese market. For that reason, I believe the current trend of M&As will continue until insurers obtain some degree of comfort in their technical accounts. It is not easy to make accurate forecasts, but I would risk saying that it will last at least two more years,” he added. “In some segments, particularly corporate insurance, the position of the market leader is hardly challenged by the second and third largest players. The other insurers follow similar strategies to the leader when it comes to their risk appetite and distribution channels, so they are not viable alternatives,” Mr Nazaré said. The risk managers also told CRE that is room for improvement when it comes to claims handling across the insurance industry. They said there remain situations where claims handling takes too long, causing potential problems for policyholders.

Risk managers say insurers are failing Portuguese companies on workers comp

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Want to read this article?

Read Next

Insurtech partners with USAID on climate adaptation programme

ICEYE in data collaboration with Juniper Re on flood and wildfire

Senior appointments in Lockton’s crisis management team

European rates up overall but financial and cyber lines falling: Marsh

European Parliament approves regulation to tackle forced labour

Related Articles