The use of captives has grown as Airmic members increasingly seek alternative means of risk transfer, Airmic Insurance has found.
Airmic’s survey, entitled Pulse Survey Report: Insurance Market Conditions, found that though the insurance market is softening, 30 per cent of respondents still believe that market conditions will deteriorate in 2023.
Geopolitical and geoeconomic risks may often lie beyond the insurance market, says Airmic. But where cover has been available, a retreat of capacity was witnessed, including risks associated with events in Ukraine, it adds.
Airmic also found that there are signs of ‘green shoots’ where the pace of the hardening of the insurance market is slowing. The trend since 2021 is that fewer respondents are saying that they find themselves in a hard market.
Besides inflationary pressures at a record high, extreme weather events and other natural catastrophes together with economic and political pressures will give cause for concern, Airmic predicts.
While the UK has not been hit as badly with these events, reinsurers are inevitably increasing rates which will of course be passed on.
The report also talks about the bigger role that ESG issues now play in underwriting strategies, resulting in a shift in attitudes on the part of the insurers.
Insurers are asking more questions than before and introducing new standard clauses relating to ESG. Airmic makes reference to a survey of insurers conducted by Marsh in August 2022, in which 79 per cent of respondents indicated they would offer incentives such as premium credits, or more favourable terms and conditions, to insured which show positive ESG metrics.
The report states that there needs to be more collaboration in the insurance industry on how to deal with climate risks, and on the measurement, management and risk financing of those risks, in view of the climate commitments insurers have made through the Net-Zero Insurance Alliance and other initiatives involving insurers.
Keith Jury, an Airmic member, says: “With global economic and political headwinds businesses are looking for value in every dollar they spend. The value of insurance is being discussed in the boardroom. We need to work as an industry to deliver that value by meaningful cover at a fair and sustainable price together with expert, analytics, advice and knowledge.”
Airmic regularly conducts a series of pulse surveys among its members, to gauge insurance market conditions.
