Stability returning to Dutch market but concerns remain

Dutch insurance buyers say that insurance market conditions are slowly improving and looking more positive, but concerns remain when it comes to areas such a lack of local underwriting authority, smaller line sizes, claims and talent retention.

The Dutch insurance market is more stable than it was a few years ago and capacity is starting to grow, according to Henk van de Beek, insurance manager at Dutch construction company Van Wijnen. “But where there is a capacity issue in the insurance industry, it is the people,” he added.

“It is hard to get good people, especially at a local level. The decisions and the capacity come from big insurers who are never in Holland. The executives in Holland don’t have the authority to make a decision so you have to go across borders to a head office in another country. There is not enough local autonomy,” he said.

This is a view shared by others. For example, Kjell van der Vooren, global insurance manager at Heineken International, has seen a gradual reduction in underwriting authority among insurers in the Netherlands.

“We find that while there are several insurers operating in the Netherlands, many of them now have their head office elsewhere. This means we have fewer decision makers based in the Netherlands and we often have to go elsewhere to get policies agreed.

“The process has changed with all the referrals and less local capacity. It is less direct. The person you are dealing with cannot make a decision because it has to go to head office. This is time consuming and more expensive. You still have the relationship with the insurance executives based in Holland but you may have to do more work in order to develop a relationship with insurance executives based elsewhere,” he said.

A related concern is the number of experienced insurance professionals either changing company or leaving the market altogether. Consequently, risk managers have to devote more time to their insurance strategy. “Renewals now start on 2 January,” said Van der Vooren. “It takes the full year to finalise your insurance coverage, whereas in the past you did not start the process until the summer.”

There is also a falling number of insurers offering general insurance in the Netherlands, he continued. “There are a number of new entrants and startups in the Netherlands but they are all providing specialty lines when what is really needed are more general insurers. It is surprising because I would have thought there would be more general insurers launching in the Netherlands after a hard market. If the trend continues, companies may be forced to look outside of the country for general insurance.”

Reduced capacity has also led to more complex claims. “Over the past few years we’ve seen that capacity has become a serious issue, and we do not see this improving,” said Yelani Rojas Morales, claims manager for AkzoNobel Insurance Management, the captive owned by the Netherlands-based painting and coating manufacturer.

“About eight years ago, we used to have only eight carriers in our general partnership liability (GPL) insurance tower, and nowadays the same capacity is filled by around 22 different players. As a response, we are always exploring alternative ways of risk transfer and strive to develop new strategies that will help us develop our insurance programmes,” she said.

Although AkzoNobel is a Dutch company in origin, Rojas Morales does not oversee many claims in the Netherlands. “Most of our large and complex claims are spread worldwide, depending on the projects that are being executed by the different lines of business.

“However, as our global insurance programmes are all based in the Netherlands, we do share some of the difficulties that other players in the market are also facing, such as reduced capacity, specifically for large claims. This means you may sometimes have up to 24 excess carriers involved in one case, which not only increases the complexity of the matter, but it also adds pressure when there are strict timelines to follow.”

“In such a scenario, claims managers need to be willing to adapt to this evolving landscape, which requires proactiveness and effective communication from all parties. It is often hard to get everyone on board when a large claim is developing, and it’s even harder to seek alignment amongst all the different players,” she said.

Any claim under an excess layer programme is difficult from both an insured and insurers’ perspective, particularly on GPL losses, said Rojas Morales. “You not only encounter a complex loss – with intrinsic difficulties related to both its technical and legal aspects – but also you are confronted with a complex insurance structure, with multiple players involved in the case management and decision making.”

“Seeking and obtaining alignment amongst different carriers is not an easy task and, unfortunately, the market has yet to address this issue with an effective solution. In practice, you have no other choice but to make the process as the claims develop, which is of course not so effective and increases the risk of the case, especially when confronted with strict court deadlines,” she added.

Albert van Haastrecht, head of the corporate insurance department at construction and engineering company Ballast Nedam and president of the Dutch risk and insurance management association Narim, is cautiously optimistic about the year ahead for the insurance market after a period of sustained market hardening. “I get the feeling that the rates are stabilising and prices are even going down in some lines, but we will have to see how the insurance market is developing. We have seen substantial increases in recent years so I do expect to see some stability,” he said.

Adding: “But I still worry about professional indemnity (PI), especially in the UK where there is lots of capacity but still high prices. This is particularly evident for special project indemnity (SPI). At the moment, we are still able to buy the protection we need, but we can only get a year’s coverage, which makes it expensive.”

Safety gear manufacturer Cofra currently places a lot of its cover in its home market of Switzerland, which is outside of the EU, said the firm’s global insurance manager Brenda Soesman, who is based in the Netherlands. But the Swiss insurance market is more limited and the Swiss Financial Market Supervisory Authority’s regulations have become more stringent, meaning there is less difference between the Swiss and EU markets. As a result, more multinational companies such as Cofra are looking to the UK for coverage, especially for financial lines and D&O where capacity is scarcer than other lines, said Soesman.

Claims for property losses can also be challenging, added Soesman. “Sometimes it is difficult to get the right loss adjuster for the claim or there may be challenges around issuing local policies.”

But capacity has increased in other lines such as cyber and political violence, both of which have been problematic in the recent past, said Soesman. She added that Cofra got a two-year long-term agreement (LTA) on its D&O programme.

“The premiums are becoming more stable and we are getting two-year LTAs in a lot of lines,” she said. “If you build the relationships and stay loyal and work together with the broker as a threesome, it works for us. We are also getting more direct communication with the insurer as some firms step away from the traditional broker role.”