Spanish buyers fear hard market is affecting claims

Spanish risk managers are concerned that the effects of the hard market are moving beyond difficult renewals to claims, where some report things are getting more tricky for buyers. “This is a perception that is growing among some members of Igrea,” said Lourdes Freiria, general director of risk and insurance at Grupo San José, during a virtual conference organised by the Spanish risk management association. Daniel San Millán, president of Igrea and risk manager at Ferrovial, said the current market is “extremely hard”. “I don’t recall anything like this, and companies and risk managers are hurting a lot… Covid-19 has heavily impacted companies, revenues have dropped significantly and everybody is slashing costs, except the insurance people, who always come up with bad news,” he added. And the debate at Igrea’s conference suggests that it is also getting harder for some policyholders to collect claims. Insurer and reinsurer executives taking part denied that they have instructed their teams to apply more restrictive claims processing criteria than usual. In fact, they said they are trying to make claims more efficient to help clients through the current difficult business environment. But José Ramon Morales, country leader for Spain and Portugal at AXA XL, said the perception of more difficult claims may have been fuelled by the fact more insurers are often now involved. This is a result of insurance buyers having to build towers with multiple carriers to secure the capacity they need in the hard market, he added. Risk managers at the event agreed that when a group of insurers has been used to deliver capacity, it can cause resistance to claims. Ms Freiria said, therefore, that the market should make sure mechanisms are in place so panel leaders can make decisions that are respected by followers. “That is something that does not always happen right now,” she said. Insurance buyers were advised to be as informed as possible about their insurance contracts and to pay attention to co-insurance and reinsurance clauses. This will mean they can make sure the panel leader’s ability to enforce claims decisions is guaranteed. “You must be very careful with your choice of leaders,” said Beatriz Valenti, head of commercial insurance at Zurich Spain. “It is important that risk managers know the factors that condition an insurance contract,” Mr Morales said. “If there are dozens of participants behind it, transparency is of essence,” he added. But David González, director of risk and insurance at Sacyr, said some placements aren’t very transparent. And he added that difficulties arranging a multi-carrier programme are not limited to claims. Mr González said that when a company is struggling to complete capacity for a large risk, the last insurer or reinsurer to quote often asks for a much higher price and tougher conditions than other participants. “We do not agree with that,” he said. “We believe that transactions must be closed at the prices and conditions that have been agreed, and not that the last comer drag [its feet] and try to establish the final rate.” Ms Freiria added that many companies feel let down because they simply cannot find the coverages they need, no matter the investments they have made in risk management. “The problem is that there is a lack of capacity. Sometimes the market has no answers for us,” she said. Alfredo Arán, general manager of global business and brokers for Mapfre Iberia, said carriers are just doing their jobs by discussing actual risks and wordings, after many years of the soft market. “We must make a self-criticism exercise and assume that we let ourselves be carried by the tide (during the soft market)… But now each one of us has no option but to underwrite risks properly,” he said. At the same event, San Millán also said the time has come for companies to look at alternative risk transfer (ART) strategies to mitigate the effects of the hard market and boost protection against uninsurable risks.

Spanish buyers fear hard market is affecting claims

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