Risk professionals’ use of captive insurance solutions continues to increase, as premium rates and the scope of cover and capacity have continued to deteriorate across a number of covers and sectors, according to Airmic’s latest Pulse Survey.
Among respondents whose organisations do not already have a captive, 23.4 per cent are now considering forming one in response to the hard market, which is an increase from the 20.3 per cent in Airmic’s previous Pulse Survey in September last year.
The latest survey, conducted in January 2021, canvassed members of the Airmic leadership group of risk professionals and insurance buyers. The survey ran over two weeks between 7 and 22 January and asked 17 questions.
The report also found that since the UK and the EU reached a post-Brexit deal in December 2020, 63.5 per cent of Airmic’s respondents are concerned that there will be additional costs to their organisations, such as the cost of issuing additional local policies and fronting costs.
Airmic outlines their concerns of post-Brexit highlighting the UK government’s review of the post-Brexit regulatory framework for insurance, and whether Solvency II will stay as it is.
Another concern of Airmic’s is whether EU captives will retain or regain passporting rights into the UK. Several of the survey’s respondents are concerned about the longer-term impact of Brexit on market capacity, increased paperwork and delays, and more generally, whether the UK insurance sector is losing its position and relevance.
Elsewhere, more Airmic members than in the previous two Pulse Surveys in 2020 say that they are seeing reduced capacity, increases in cover exclusions, and poor and late communication from insurance partners.
The survey found that higher rates continue to be a characteristic while some insurers have withdrawn from certain lines of insurance altogether.
In terms of overall performance, however, the report reveals marginally more respondents than in our previous Pulse Surveys say that they are satisfied with their insurer’s performance.
The latest survey totalled 84 per cent, compared to 81.7 per cent in Q3 2020. Meanwhile, brokers are 98 per cent satisfied with their performance, up from 90 per cent in Q3 of 2020.
Airmic suggests to pre-empt some of the issues insurance buyers have frequently raised, such as the need for stronger and more timely communication from their insurance partners, insurers and brokers should build up a stronger culture of rapport with their customers.
The report highlights that renewal teams should have greater diversity in terms of background and skills, rather than just being the team that strikes the deal with the client.
Commenting on the report, Julia Graham, Deputy CEO and technical director, Airmic, says: “One major change we would like to see is a shift away from the tripartite relationship between insurer, broker and buyer, towards a ‘roundtable relationship’ which draws in a broader range of perspectives.”
She adds: “We urge underwriters and brokers to include colleagues from their claims teams and loss adjusters more actively in the renewal and account management processes.”
Recently, Airmic announced that it is “cautiously” planning for the return of its annual conference in October, which will be held in Brighton on 4 to 6 October.
